Skip to main content

Full text of "Taxation in American states and cities"

See other formats 


Google 


This  is  a  digital  copy  of  a  book  that  was  preserved  for  generations  on  Hbrary  shelves  before  it  was  carefully  scanned  by  Google  as  part  of  a  project 

to  make  the  world's  books  discoverable  online. 

It  has  survived  long  enough  for  the  copyright  to  expire  and  the  book  to  enter  the  public  domain.  A  public  domain  book  is  one  that  was  never  subject 

to  copyright  or  whose  legal  copyright  term  has  expired.  Whether  a  book  is  in  the  public  domain  may  vary  country  to  country.  Public  domain  books 

are  our  gateways  to  the  past,  representing  a  wealth  of  history,  culture  and  knowledge  that's  often  difficult  to  discover. 

Marks,  notations  and  other  maiginalia  present  in  the  original  volume  will  appear  in  this  file  -  a  reminder  of  this  book's  long  journey  from  the 

publisher  to  a  library  and  finally  to  you. 

Usage  guidelines 

Google  is  proud  to  partner  with  libraries  to  digitize  public  domain  materials  and  make  them  widely  accessible.  Public  domain  books  belong  to  the 
public  and  we  are  merely  their  custodians.  Nevertheless,  this  work  is  expensive,  so  in  order  to  keep  providing  this  resource,  we  liave  taken  steps  to 
prevent  abuse  by  commercial  parties,  including  placing  technical  restrictions  on  automated  querying. 
We  also  ask  that  you: 

+  Make  non-commercial  use  of  the  files  We  designed  Google  Book  Search  for  use  by  individuals,  and  we  request  that  you  use  these  files  for 
personal,  non-commercial  purposes. 

+  Refrain  fivm  automated  querying  Do  not  send  automated  queries  of  any  sort  to  Google's  system:  If  you  are  conducting  research  on  machine 
translation,  optical  character  recognition  or  other  areas  where  access  to  a  large  amount  of  text  is  helpful,  please  contact  us.  We  encourage  the 
use  of  public  domain  materials  for  these  purposes  and  may  be  able  to  help. 

+  Maintain  attributionTht  GoogXt  "watermark"  you  see  on  each  file  is  essential  for  informing  people  about  this  project  and  helping  them  find 
additional  materials  through  Google  Book  Search.  Please  do  not  remove  it. 

+  Keep  it  legal  Whatever  your  use,  remember  that  you  are  responsible  for  ensuring  that  what  you  are  doing  is  legal.  Do  not  assume  that  just 
because  we  believe  a  book  is  in  the  public  domain  for  users  in  the  United  States,  that  the  work  is  also  in  the  public  domain  for  users  in  other 
countries.  Whether  a  book  is  still  in  copyright  varies  from  country  to  country,  and  we  can't  offer  guidance  on  whether  any  specific  use  of 
any  specific  book  is  allowed.  Please  do  not  assume  that  a  book's  appearance  in  Google  Book  Search  means  it  can  be  used  in  any  manner 
anywhere  in  the  world.  Copyright  infringement  liabili^  can  be  quite  severe. 

About  Google  Book  Search 

Google's  mission  is  to  organize  the  world's  information  and  to  make  it  universally  accessible  and  useful.   Google  Book  Search  helps  readers 
discover  the  world's  books  while  helping  authors  and  publishers  reach  new  audiences.  You  can  search  through  the  full  text  of  this  book  on  the  web 

at|http  :  //books  .  google  .  com/| 


1. ' 


VND  Cities. 


COMPANY 


IClirijarli  €.  lElg'g  Movia. 


The  Labor  Movement  in  America $1.50 

Taxation  in  American  States  and  Cities    .    .    .     1.75 

Problems  of  To-day 1.50 

Social  Aspects  of  Christianity 90 

Socialism  and  Social  Reform 1.50 

r.  Y.  CROWELL  &  CO..  New  York. 

French  and  German  Socialism  in  Modem  Times,      .75 
HARPER  &   BROS.,  New  York. 


An  Introduction  to  Political  Economy  ....     1.00 

Outlines  of  Economics  (College  Edition)    .    .     1.25 

HUNT  &   EATON,   New  York. 


TAXATION 


IN 


American  States  and  Cities. 


BY 


RICHARD  T.  ELY,  Ph.D.,  LL.D. 

PROPISSOR  OF   POLITICAL  SCONOMY   AND  DIRBCTOR   OP  THB  SCHOOL  OP 

■CONOMICS,    POLITICAL    SCISNCB    AND    HISTORY, 

IN  THB  UNIVBRftlTY  OF  WISCONSIN. 


ASSISTED  BY 


JOHN    H.   FINLEY,   A.B. 

PRBSIOBNT  OF  KNOX  COLLBCB,  GALBSBURG,  ILL. 


FOURTH   THOUSAND, 


NEW  YORK:  46  East  mth  Strkbt 

THOMAS  Y.   CROWELL  &  COMPANY 
BOSTON:  100  Purchase  Strbbt 


CffyritU  h 
TMohu  v.  CuowIiJ.  a  Co 


PREFACE. 


'T'HE  present  volume  a 

but   for   American   a 

enough  to  appreciate  the  v 


ot  intended  primarily  for  specialists, 
.zens  generally  who  are  intelligent 
It  importance  of  the  topic  with  which 
it  deals.  It  is  meant  to  be  apopiJar  work,  but,  il  is  hoped,  in 
the  better  sense  of  the  word.  I  have  endeavored  to  keep  ihc 
essential  feels  in  mind,  and  to  avoid  all  technical  details  which 
are  not  essential  to  an  understanding  of  the  main  issues. 

The  work  is  larger  than  I  thought  it  would  be  as  it  is;  and 
had  I  written  an  exhaustive  treatise,  such  as  I  would  have  tried  to 
write  tiad  my  book  been  designed  primarily  for  lawyers  or  political 
economists,  it  would  have  been  necessary  to  publish  four  or  five 
volumes  instead  of  one.  The  specialist  wilt  then  understand 
why  much  has  been  omitted  which  he  would  gladly  have  seen 
inserted.  Perhaps  the  general  reader  will  obtain  an  idea  of  the 
largeness  of  the  subject  of  taxation  in  states  and  cities,  when 
told  that  the  bill  itself  presented  by  the  Maryland  Tax  Commis- 
sion to  the  legislature  covered  one  hundred  and  twenty-one 
printed  octavo  pages.  An  adequate  explanation  of  all  parts  o( 
the  bill  would  have  required  at  least  as  many  additional  pages. 

A  study  of  taxation  is  calculated  to  give  one  a  rather  pessi- 
mistic view  of  American  laws,  American  Inslitutious,  and  American 
character.  As  soon  as  one  begins  to  examine  the  facts  respect- 
ing taxes  and  tax-payers  in  our  ddes.  one  discovers  that  many 
an  advocate  of  governmental  reforms,  loud  in  liis  professions,  ia 


J 


viii  PREFACE. 

as  unscrupulous  a  tax-dodger  as  any  unregenerate  politidan  of 
the  "  spoUs  "  achool ;  that  insny  a  man  who  plumes  himself  on 
the  soundness  of  his  Christianily,  is  hut  loo  ready  to  browbeat 
the  tax-assessor  and  sliift  his  just  burden  to  the  shoulders  of 
the  weak  and  defenceless ;  that  many  a  one  who  figures  in  the 
lists  of  donors  to  charitable  and  philanthropic  institutions,  gives, 
after  all,  only  a  part  of  what  he  has  withheld  from  the  public 
treasury.  On  the  other  baud,  it  is  encouraging  to  find  rare 
instances  of  men  of  wealth  who  do  not  avail  themselves  of  the 
means  at  their  command  to  evade  laxes,  and  who  bear  heavy 
burdens  placed  upon  them  by  an  antiquated  and  Iniquitous  sys- 
tem of  taxation. 

It  would  also  be  difficult  for  me  to  take  too  sombre  a  view  of 
human  nature,  for  in  the  preparation  of  this  work  1  have  been  the 
recipient  of  so  many  kindnesses  from  so  many  people  in  every 
part  of  the  United  States,  that  I  find  niyseif  embarrassed  to  know 
how  to  express  my  gmtitude.  Should  I  print  simply  a  list  of 
names  of  those  who  have  aided  me  in  one  way  and  another,  it 
would  require  two  or  three  pages,  1  must  thank  the  different 
otiicials  of  states  and  cities  who  have  often,  at  no  inconsiderable 
inconvenience  to  themselves,  supplied  me  with  public  documents 
and  written  information  on  numerous  points  of  the  various  sys- 
tems of  taxation  with  which  they  are  concerned.  It  seems 
ungrateful  not  to  mention  them  by  name,  but  there  are  so  many 
of  them  that  it  is  impossible  to  do  this. 

Professor  J.  B.  Clark,  of  Smith  College,  Northampton,  Mass. ; 
Professor  E.  R.  A.  Seligman,  of  Columbia  College,  N.Y.; 
Professor  Arthur  Yager,  of  Georgetown,  Ky. ;  Professor 
Edward  W.  Bemis,  of  Vanderbilt  University;  Hon.  P.  Bliss,  of 
Missouri;  Hon.  Seymour  Dexter,  of  Elmira,  N.Y. ;  Hon. 
James  Alfred    Pearce.  of    Kent    County,    Md. ;     Mr.    J.    R. 


I 


PREFACE.  ut 

Lamar,  of  Augusta,  Ga, ;  Mr.  Stuart  Wood,  of  Philadelphia; 
Mr.  Francis  T.  King,  of  Baltimore;  Hon.  T.  M.  Cooley.  of  The 
Interstate  Commerce  Commission;  my  father,  Mr.  E.  S.  Ely, 
ofFredonia,  N.Y.;  Mr.  W.  B.  Hi)l,  of  Macon.  Ga. ;  Hon.  Lewis 
Hopkins,  of  Baltimore;  Professor  George  W.  Knight,  of  the 
State  University  of  Ohio ;  Professor  Henry  C.  Adams,  of  the 
University  of  Michigan ;  and  Colonel  William  P.  Craighill,  of 
Baltimore,  have  written  me  valuable  and  suggestive  letters  on 
some  aspects  of  state  or  local  finance.  It  is  scarcely  necessary 
to  say  that  not  one  of  these  gentlemen  is  to  be  regarded  as  in 
any  way  responsible  for  the  views  I  have  expressed  in  this  work. 

1  am  indebted  to  Mr.  Joseph  A.  Hill,  graduate  student  of  Har- 
vard University,  for  Ihe  loan  of  a  manuscript  essay  on  "Taxation 
in  States  and  Cities"  ;  to  Professor  Arthur  Yager  for  the  loan  of 
a  manuscript  essay  on  "  Taxation  in  Kentucky  "  ;  to  Mr.  Henry 
B.  Gardner,  graduate  student  of  the  Johns  Hopkins  University, 
for  the  loan  of  his  manuscript  essay  on  "Taxation  in  Rhode 
Island";  and  to  my  colleague,  Professor  George  H.  Emmott,  for 
reading  parts  of  this  work,  and  discussing  with  me  some  of  the 
legal  aspects  of  taxation. 

A  considerable  part  of  one  chapter  in  this  book  appeared  as 
an  article  in  the  Baltimore  Sun,  in  my  series,  entitled,  "  Problems 
of  To-Day. "  I  must  also  make  acknowledgment  to  the  Sun  for 
a  few  other  extracts  from  the  same  series. 

Finally,  I  desire  to  acknowledge  the  airt  I  have  received  in 
various  ways  from  Mr.  John  P.  Poe  and  Mr.  Charles  M.  Arm- 
strong, with  whom  1  was  associated  both  on  the  Baltimore  City 
Tax  Commission  and  the  Maryland  Stale  Tax  Commission  ;  lo 
Mr.  Summeriield  Baldwin,  of  the  City  Commission;  and  lo  Mr, 
James  Alfred  Pearee.  of  the  Stale  Commission 

1  have  omitted  the  names  of  many  to  whom  I  am  indebted  for 


X  PREFACE. 

kindnesses  which  1  sincerely  appreciate.  I  must  mention  the  very 
special  aid  I  have  received  from  Mr.  John  H.  Finley,  graduate 
Hludenl  of  the  Johns  Hopkins  University,  who  for  many  weeks 
has  devoted  his  entire  time  to  this  book,  and  has  assisted  me 
with  extraordinary  diligence  and  a  display  of  unusual  ability. 
Whatever  merits  this  book  may  i»ssess  arc  duK  to  no  small 
extent  to  Mr.  Finley,  and  it  has  seemed  to  me  only  proper  to 
place  bis  name  on  the  tide  page. 

It  is  extremely  difficult  to  obtain  the  iniiterial  needed  for  ade- 
quate presentation  of  the  finances  of  all  our  stales  and  cities 
hope  in  a  future  edition,  should  one  be  called  for,  to  give  a  n 
□early  perfect  account  of  the  facts  respecting  the  revenue; 
American  states  and  cities,  pa-st  and  present,  and  I  ask  that  all 
readers  who  have  it  in  iheir  power  to  assist  me  to  complete  my 
collection  of  official  documents,  will  have  the  kin 
1  want  reports  of  auditors  and  treastirers  of  states  and  cities, 
reports  of  tax  commissions,  governors'  and  mayors'  messages ; 
and,  in  short,  all  financial  documents  which  1  can  secure.  There 
are  many  such  reports  stored  away  in  old  garrets  and  out-of-the- 
way  places,  of  no  possible  value  to  their  present  owners,  which 
would  be  of  use  to  me.  The  older  reports  are  more  difficult  to 
obtain,  and  are  on  that  account  more  valuable ;  but  my  collection 
of  even  recent  documents  is  imperfect.  I  trust  that  I  shall  re- 
ceive further  assistance  from  members  of  legislattires  and  officials 

Instruction  in  sewing  and  cooking  has  been  introduced  in 
some  of  our  schools,  and  the  results  have  been  most  satis- 
&ctory.  I  venture  to  express  the  hope  that  at  least  a  few 
schools  and  colleges  will  use  this  work  as  a  text-book  on  taxa- 
tion, for  the  subject  is  of  vital  importance  to  all  American 
citizens.    The  dilTerence  between  a  good  systen 


PREFACE, 


XI 


a  poor  one  is  to  many  of  our  fellow-citizens  precisely  the  differ- 
ence between  having  cloth  to  make  into  garments  and  going 
naked;  the  difference  between  having  food  to  cook  and  going 

hungry. 

RICHARD  T.  ELY. 

Johns  Hopkins  University, 

Baltimorb*  Md.,  April  14,  x888. 


TABLE    OF   CONTENTS. 


Part  I. 

INTRODUCTION. 

X:aAFYis.  I.— Taxrs  Defined 3 

Chapter  II.  —  Central  Prefoiitions  respecting  Taxes. 

I  Taxes  are  oat  payments  in  exchange 13 

f  Taxes  ace  do!  debis tS 

I  The  power  la  impose  taxes  is  legislative ig 

I  Taxes  are  tegular  and  orderly  contributions      ....  23 
1   What  '-a  cslled  a  tax  in  one  place  is  not  always  called  a  toi  in 

another 23 

Tbe  power  of  taxation  cannot  be  delegated      ....  23 

Chapter  III.—  The  Ortgin  and  Grewlh  0/ Modern  Taxa- 

I    Taxation  aa  we  Dodersland  it  a  new  thing aj 

^s  of  the  slate  in  the  Middle  Ages  ....  30 

"nuies  loDg  bold  a  subordinate  position  in  budgets  of  slates  35 

T>xes  first  paid  only  by  the  weak  and  defenceless    ...  42 

I    Tlie  early  American  Tiews  of  taialioe 44 

I   Otbei  sooices  of  revenue  at  the  present  time. — Comparative 

Uatcment 47 

Chapter  IV.  — .^  Feio  Genera!  Remarks  on  Ike  Workings 
of  Taxation. 

I    TUcei  oAen  yield  larger  returns  than  ordinary  eipenditurcs         .  55 

L'Ttie  tendencies  of  taxalion  are  various 57 

■TkxBlion  and  liberty j8 

~  Kition  and  aociil  refurm 63 


XIV  TABLE    OF  CONTENTS. 

CuAPTES  \.~The  Differmt  Kinds  of  Taies. 

Qauificalion  of  Eaiet  has  become  iinpurlant         ....  63 

The  claisilication  of  the  PhysiocratB 63 

Olhci  clossiHcalioni 64. 

Adiiimistcalive  clissilicslion  of  Uies         .        .        ,        .        .  76 

Olher  modes  of  clasaificalion 77 

CHAITEK  \\.  — Direct  and  Indirtct  Taxalien   Cemfared. 

lodirecl  taxes  are  chiefly  taxes  on  comnbodities         ...  79 

Indirect  taxet  violate  the  principle  of  e<jualitf      ....  So 

Inditei^  taxation  and  pauperism 83 

Indirect  taxes  obstruct  trade        ....,,.  83 

Indirect  taxes  and  monnpol/ ,  83 

Indirect  taxes  congenial  to  despotism  and  aristocracy  .        .        .  S5 

Direct  taxes  promote  good  ciliienship 87 

A  judicious  combiaation  of  direct  and  indirect  taxes  desirable      .  SS 
Comparison  of  the  cost  of  mising  revenues  "a^  direct  and  indirect 


Chaiter  VII.—  The  LiUralurc  0/  TaJrurt 
Paucilj' of  the  literature  of  taxation  . 
Reports  of  tax  commissions,  .  .         .         . 

Treatises  on  political  economy  ant!  finance 

Other  Muices  of  information    .... 


Part  II. 

TAXATION  AS  IT  IS. 

Chaiter  I.  —  Colvninl  TaxatieH^ 
Introductory  remark 


right  to  vole  the  (axes  ...  106 

Rhode  Island IC7 


TABLE   OF  CONTENTS. 

\  VcklnBlaiy  eontrifaulioiis  earl]'  replaced  by  taxes        .... 

Tues  on  property  and  polk        , 

Qtiit-rents 

f™» 

Other  taxes 

Lotteries ; 

CHAI-FeR  11.—  Taxalien  in  ijgA 

Hie  objects  and  principles  o\  laxalioD  in  1796     .        ,        ,        ,  . 

Taxes  on  land 

Other  peculiarities  in  the  various  tax  systems        .        .        .        ,  : 

Apportion  mcnt  and  collection  of  taia     ...... 

Assessment  of  taxes 

I  Collection  of  taxes 

I   COmpeDsation  of  assessors  and  collectors 130 

ChAITXB  111.—  TAe    TransilioH  Period. 

I    General  remu-ks 131 

1   Connecticut         ..........  133 

Other  states 137 

I  Reason  for  ihe  laxatiun  of  all  property  at  one  uniform  rate       .  iji; 

I   Disss tisfajrli on  early  manifested I4I 

re  of  the  difficulty       .......  143 

rile  (estimoiiy  of  experience 145 

Chapter  W .~ Exptrienct  af  Ohio. 

I  Constitulional  provisiaos  ........  146 

J-Real  estate 148 

■:71w  lutaCion  of  personal  property  in  Ohio  .        .        .  153 

Chapter  V.  —  E-tperience  a/  Georgia     ....  160 

l,CUy  and  town  properly 164 

I  Notes,  accounts,  bonds,  meicbandise 164 


XVI  TABLE.    OF  CONTENTS. 

Chapter  VI.  —  Experience  of  WiuansiH  and    Weil  Vir- 
ginia. 

WiieoBsin 170 

Taxation  of  railroads         .         .        .        .        .        .        .  170 

The  generil  property  lax 17* 

Wett  VirEinia 173 

Those  evading  laici  ate  generally  best  able  to  pay  Ihem       .  1 7J 

CoKWWkVW.  — Experience  0/  New   York      ...  176 

Who  pays  taxes  on  penonal  ...,.,.  177 

BoBidiofcquoliuitiDnmNew  York  State        .        .        .        ,  1S4 

CHArraii  V\l\.—  Experience  0/  Olier  States. 

New  Hampshire 188 

Conueclicut 188 

Maryland 189 

Illinois 193 

Dr.  Fallen's  Essay 19^ 

The  Report  of  the  Revenue  Commission  of  1SS6       .        ,  197 

Chaiter  IX. —  OAer  Features  ef  Existing  Financial  Sys- 

Introductoiy 301 

Ordinary  business  licenses  and  occupation  toxn       .        ,        ,'  zoj 

Poll  taxes 309 

Other  sources  of  rcvenae 313 

Chaptbb  X.—  The  Testimeny  ef  Rtaiem. 

States  not  ladepeodenl  in  matters  of  laxation  ....  217 
Returns  on  property  of  a  high  degree  of  mobiliiy  dependent  on 

general  conditions 318 

Inletference  of  the  federal  government  in  mailer*  concerning 

local  taialion 325 

Our  eiisling  methods  of  taxation  needlessly  demoralising    .        ,  219 


TABLE   OF  CONTENTS.  xvii 

Part  III, 

TAXATION  AS  IT  SHOULD  BE. 

CHAFTHt  I- — The   Frinei^lti  en  ojAi'cA  a  New  System  of 

Taxation  iKeuld  bt  Basid 237 

CHAlTEli  II. —  Taxation  an  f/ial Etiale.        .        .        .        246 

Chaiteh  l\l.  —  ExtmptioH  ef  Rtal  EsSali  from  Slntt 
Taxation. 

asons  for  IhiB  eiemplion 251 

VA  furtbci  reason  for  separating  (he  sources  of  ilale  revenue  from 

the  loiucei  of  local  revenue IJ3 

Chapter  IV.  — ^  Plan  whrreiy  a  Part  of  tht  Increasing 
Value  of  Real  Estate  in  Slates  and  Cilui  may  be  Se- 
cured to  the  Public 264 

CHAFTCB  S.~  Natural  Monopolies. 

nopolie*  defined  and  chavacteriied  ....         369 
PlofiUbleneaa  of  nalural  inonopulics    ......    370 

CHAFTHt  VI.  —  Taxation  of  Ike  Manufacture  and  Sail  of 
JntaxieaHng  Li  guars. 

diEcd  prohibition iSo 

jRfgh  licenses 283 

Chapter  VII.—  Taxation  of  tacomes. 

W  {NMilioD  of  an  income  lax  in  a  sv  stirm  >'f  laxcs       .         .         .  >67 

:ume  ax  will  pmnioie  guix)  guveromeat         .        .        ,  3S9 

il  opinion  againsl  an  income  tu 390 

come  tax  and  pcraoniJ  property  tax  contrasted      .        ■        •  194 

S  inCame  tax  must  he  a  state  tax         ......  396 


itofai 


a?; 


XViil                           TABLE   OF  CONTE.VTS.  ^H 

SufScienc;  of  a  low  income  tax .  300 

The  income  laxes  in  American  states 301 

Pennsylvania  levies  an  income  lax  on  special  kinds  of  income     .  302 

All  incumes  above  >  moderate  exemption  should  be  taxed        .  J03 

Progreaaive  iiertui  proportiond  taxation 305 

Chaptee  VTII. —  TaxalioH  ef  InJiiritanifi  and  BeqHisli  .  31* 

CHAJTHI  W.  —  Busimss  Tax 3>l  ^H 

QiAlTER  X. —  Taxation  of  Railroads  Optrattd  by  Steam 
and  Othtr  Corporations. 

Railroads 324 

Corporation* 32S 

Cmafter  XI.  — AfisitllaatoHS  kinds  of  Ftrwnal  Property. 

Taxation  of  household  goods 334 

Exemption  of  certain  kinds  of  personal  property          ,        .        .  335 

DUfusion  or  the  benefits  of  eiemption 33S 

Chaithr  'H.W.—  TaxaHeH  ef  Savings  Banks,    Ckurcha, 
and  Educational  and  Bmevelent  Institutions. 

Savings  liaiiki 340 

Church  building! 344 

Educational  and  benevolent  institutions       .        .        .        '        .  345 

CHAFran   XIII. —  TteknUal  Dttails    and  AdminxUrative 

Machinrry 350 

Oathi 35' 

Money  to  be  raiwd  for  the  coming  year 353 

Discounts  for  the  prompt  payment  of  la»e» 354 

Countie 360 

aty  assessors 3^5 

Valuation  of  real  and  leasehold  property  in  Baltimore  Qly      .  3^7 

Appeals i^ 

Conclusion 37' 

i 


TABLE   OF  CONTENTS. 


Part  IV. 

CONSTITUTIONAL  PROVISIONS,  STATISTICAL  INFORMATION, 
AND  MISCELLANEOUS  MATTER. 

L    CoHStllulioaal  Provisions. 

1.  Genetal  rcniarlis 3^5 

a.  Tahulat  slaltmenl opp.  396 

3.  Addilionftl  provisions 397 

IL    UfatHUes  and  E-iptudilurti  of  Iht  Slalts. 

I.  Coinmcntl 407 

i.  Revenues  and  eipeudilurcs  of  each  state       .        .        ,    408 

3.  Statislical  tnhle  of  revenuei  and  npendiluces    .        opp.  453 

4.  Table    ihowiag    receipts,    expendilucei,   etc.,   of   the 

territariet 454 

5.  Taxation  iu  Ohio 455 

6.  Taxation  in  New  Yotk 457 

7.  Rei-enues  of  North  Carolina 458 

8.  Royalty  from  phosphate  rock  in  South  Carolina,  by  C. 

Meriwether,  A.  B 459 

9.  Onondaga  Salt  Springs  of  New  York      ....     466 

ni.    Rtvinutt  and  Rxpendilurts  e/  Cilici. 

I.  Budgeta  of   BaUimorc,  Boston,   Chicago,    New    York, 

Philadelphia,  and  Atlanta       ......         469 

a.  Comparative  table  of  receipls  and  expenditures  of  the 

cities  named 47S 

3.  Statistical  tables  of  valuaJon  of  property,  taxation,  etc, 

in  Baltimore,  Boston,  Chicago,  Cincinnati,  New  VorU, 

Philadelphia,  and  Providence         ....        4S0 

IV.  ttaiis  of  TuxaHoH. 

I.  TaUc  shoning  rain  of  taxation  in  the  states  .         .     496 

3.  Table  showing  rates  of  laialiun  in  New  York  from  1816- 


497 


,    VatualiaHs  0/  Real  and  Ftnonal  Propert_ 
t.  Table  ttom  censni  report  of  1880 
s.  Ttblc  Grom  census  report  of  iSSo 


TABLE  OF  CONTENTS. 

PAGB 

3.  Valuations  in  the  states  in  1887  compared  with  1880   .    500 

4.  Connecticut  grand  list 503 

5.  Valuation  of  property  in  Charleston      •        •        •        .    507 

VL  Fublic  Debts  of  StaUs  and  Cities, 

1.  Constitutional  provisions 508 

2.  Additional  constitutional  provisions  •        •        •        •  510 

3.  Statistical  table 513 

VIL  Inheritance  and  Bequests. 

I.  Comments  on  proposal  to  change  statutes  of  descent 

and  wills  in  Illinois 515 

2i  Bill  introduced   in  the  Illinois  legislature  to  reform 

statutes  of  descent  and  wills 519 

3.  New  York  laws  in  regard  to  collateral  inheritances  and 

bequests    •••••«,••    533 


PART   I. 


INTRODUCTION. 


PART   I. 

INTRODUCTION. 


CHAPTER    I. 


TAXES    DEFINED. 


"^HE  preparation  of  a  book  on  taxation  at  once  si 

the  question:  What  are  taxes?  While  most  men 
have  a  sufficiently  clear  conception  of  a  tax  to  recognize 
one  in  the  concrete,  it  will  be  found  by  those  who  try,  a 
most  difficult  thing  to  frame  such  a  definition  of  taxes  as 
to  include  everything  which  may  properly  be  called  a  tax, 
and  exclude  everything  which  cannot  properly  be  called  a 
tax.  Many  definitions  have  been  given  to  the  public  by  dif- 
ferent writers  on  finance,  but  no  one  of  them,  it  seems  to 
me,  is  accurate  in  every  particular.  I  will  quote  a  few  of  the 
most  noteworthy  definitions  of  taxes,  and  after  criticising 
them  briefiy,  will  present  one  of  my  own.' 

Professor  Knies  of  the  University  of  Heidelberg  defines 
taxes  in  these  words :  "  Taxes  are  the  legally  determined 
and  legally  collected  contributions  of  individuals  for  meeting 
the  necessary  and  general  expenses  of  the  stale."     This 

'  Othetwords  are  used  to  denote  taxes  or  a  particular  kind  of  Iax<», 
>s  for  cuamplc,  impusls,  cuslomi  duties,  and  excise  liulici,  which  are 
usually  called  inlctnal  revtimc  lues  in  Ihe  United  Slates.  The  Ftetich 
nte  the  word  imphls  for  lanes,  aiid  the  Germans,  Sl.-uci  n. 


4  INTRODUCTION. 

definition  may  be  Wd  to  tell  us  what  taxes  ought  to  be, 
rather  than  what  taxes  are.  As  a  matter  of  fact  we  find 
taxes  frequently  levied  not  for  the  necessary  expenses  of 
government,  but  to  provide  the  means  for  extravagant  and 
useless  or  worse  than  useless  expenditures,  while  they  are 
too  often  laid  upyon  the  people  not  for  the  sake  of  the  gen- 
eral welfare,  but  to  subser\'e  some  private  end.  WTien  we 
examine  the  institutions  and  the  public  life  of  countries  like 
Turkey  and  Russia,  we  at  once  discover  a  wide  divergence 
between  the  actual  practice  with  respect  to  taxation  and  the 
requirements  of  the  definition  given  by  Knies.' 

Judge  Cooley,  in  his  work  on  "Taxation,"  defines  taxes 
"  as  being  the  enforced  proportional  contribution  of  persons 
and  property  levied  by  the  authority  of  the  state  for  the 
support  of  government  and  for  all  public  needs."  On  the 
one  hand,  this  definition  fails  to  include  with  desirable 
precision  some  ideas  which  may  properly  be  embraced  in  a 
definition  of  taxes,  and  on  the  other,  it  does  not  appear 
to  be  quite  accurate.  Taxes  are  not  always  levied  even  pro- 
fessedly for  public  needs,  unless  we  go  so  far  as  to  claim 
that  every  contribution  from  the  public  treasury  is  for  a  pub- 
lic purpose,  simply  because  it  has  been  sanctioned  by  public 
authority-  Constitutions  at  times  even  make  provision  for 
expenditures  in  order  to  meet  some  private  need.  Section 
9  of  Article  I.  of  the  constitution  of  New  York  provides 
that  "  the  assent  of  two-thirds  of  the  members  elected  to 
each  branch  of  the  legislature  shall  be  requisite  to  every  bill 
appropriating  the  public  moneys  or  property  for  local  or  pri- 
vate purposes."  The  constitution  of  Rhode  Island,  in  sec- 
tion 14  of  Article  IV.,  contains  the  same  provision. 

^  It  is  proper  to  say  that  this  definition  is  taken  from  the  notes  on  the 
lectures  by  Professor  Knies  which  I  made  while  a  student  in  Heidel- 
l)crg. 


TAXES  DEFINED.  5 

A  remarkable  instance  of  a  tax  imposed  for  private  pur- 
poses is  afforded  by  ihe  history  of  Maryland.  Luther  Martin, 
"  the  Federal  Biill-Dog,"  was  much  esteemed  by  the  bar  of 
Maryland,  and  when  he  was  rendered  dependent  upon  his 
friends  in  1820  by  a  stroke  of  paralysis,  a  great  deal  of  sym- 
pathy was  aroused  for  him.  This  led  in  1 S33  to  the  passage 
of  an  act  by  the  legislature,  requiring  every  lawyer  in  the 
state  to  pay  an  annual  license  fee  of  five  dollars  to  trustees 
for  the  use  of  Luther  Martin.' 

Paul  Leroy-Heaulieu,  in  his  "Traiti  de  la  Science  des 
Finances,"  in  one  place  defines  taxes  in  these  words; 
"Taxes  are  simply  contriliulions  demanded  of  citizens  as 
their  share  of  the  expenses  of  government," '  and  on  the 
following  page  he  gives  this  somewhat  more  amplified  defini- 
tion ;  "  Every  contribution  regularly  demanded  of  the  citizens 
by  the  constituted  authorities  of  the  land  for  meeting  the 
expenses  of  government,  is  a  lax."  The  objections  to  these 
definitions  by  I^roy-Beaulieu  are  similar  to  those  given  above, 
and  it  may  be  said  that  they  positively  exclude  some  purposes 
for  which  taxes  are  levied  which  might  possibly  be  included 
under  Judge  Cooley's  definilion.  Taxes  are  levied  for  other 
purposes  than  the  support  of  government.  They  are  laid  to 
encourage  people  to  do  certain  things,  and  also  to  dissuade 
ihem  from  doing  certain  things.*  Taxes  on  imports  are,  for 
example,  often  designed  to  encourage  people  to  manufacture 


>Sec  "Lulher  Martin,  the  Federal  Bull-Dug,"  by  Henry  P.  Gud- 
dard,  page  28,  "  Maryland  Hisloticil  Society  Papers,"  Ballimorc,  1887. 

'  Volume  I.,  page  104,  ofscciinil  edition. 

'The  Maryland  constilution  eipressly  grants  lo  the  legislature  the 
power  to  levy  lai«  for  th«  promulicin  of  the  general  n-elfare.  A  part 
of  Article  XV.  of  the  Declaration  of  Rights  contains  these  wuids: 
"  Fines,  duties  or  taies  may  properly  and  justly  be  imposed  or  laid  with 
■  political  vieu',  for  the  good  government  and  benefit  of  ihe  community." 


mTRODUCTION. 


;  regarded  ; 


meihing 


commodities,  while  i 
merely  incidental.' 

The  high  licenses,  which  in  Illinois,  Pennsylvania,  Minne- 
sota, and  elsewhere  are  exacted  of  dealers  in  intoxicating 
liquors,  profess  to  have  in  view  the  discouragement  of  (he 
liquor  traffic.  These  licenses  may  yield  large  revenues,  but 
the  advocates  of  this  sort  of  taxation  claim  that  the  benefits 
which  accrue  to  the  public  treasury  are  something  merely 
incidental,  while  the  main  object  is  to  diminish  the  number 
of  drin king-saloons,  and  thus  to  lessen  the  curse  of  intemper- 
ance. \  tax  of  ten  per  cent,  is  laid  by  federal  law  on  all 
bank  notes  issiietl  by  any  other  banking  associations  than 
those  organized  under  federal  law  and  known  as  national 
banks.  As  this  lax  more  than  er^uals  any  benefit  which  could 
accrue  to  any  one  from  the  issue  of  bank  notes,  it  lias  com- 
pletely suppressed  the  issues  of  state  banks,  and  was  designed 
to  accomplish  this.  It  has  been  decided  by  our  courts  that 
the  right  of  taxation  includes  the  right  to  destroy  value.  Chief 
Justice  Marshall  says  "the  power  to  tax  involves  the  power 
to  destroy,"  and  "  if  the  right  to  tax  exists,  it  is  a  right  which 
in  its  nature  acknowledges  no  limits." " 

The  following  definition,  upon  which  I  have  spent  consid- 
erable thought,  appears  to  me  to  contain  an  accurate  descrip- 
tion of  taxes :  — 

Taxes   arc   simply   one-sided  transfers   nf  economic  goods 


'  Clay  favored  in  tSl6  "a  Uiotough  and  decided  protection  to  home 
manufaclurei  by  amjile  dulics,"  and  Mr.  Ingham,  in  supporting  him, 
Mid:  "The  revenue  was  only  an  tncidtnlat  coasideration  and  ought 
not  (o  have  any  influence  in  the  decision  upon  the  pcopoiilion  before 
the  commillcc."  Sec  "Taialion  in  the  United  Slates,  17S9-1816,"  hy 
Henry  Carter  Adams,  Ph.D.,  page  35,  Johns  Hopkins  Univerdty  Sludiea 
in  Historical  and  Political  Science.  Volume  II.,  Nu».  V.-VI, 

*  See  Coolpy's  "Tojcalion,"  foot-nole  z,  pages  10  and  11. 


A 


TAXES  DEFINED. 


I 

^^E   Bode  lit 


demanihd  of  the  citizens,  and  occasionally  of  those 
not  citiuns,  but  who,  nevertheUss,  art  ivilhin  the  reach  of 
the  taxing  power,  by  the  constituted  authorities  rf  the  land, 
for  meeting  the  expenses  of  government,  or  for  some  other 
purpose,  with  the  intention  that  a  common  burden  shall  be 
maintained  by  common  contributions  or  sacrifices. 

Several  points  in  this  definition  require  comment.  Taxes 
arc  described  as  one-sided  transfers.  Tlie  element  of  reci- 
procity is  excluded.  Taxes  are  not  an  exchange,  nor  are 
ihey  a  payment.  The  sovereign  power  demands  contribu- 
tion?*from  citizens  regardless  of  tlie  value  of  any  services 
which  it  may  perform  for  the  citizen.  This  is  a  clear  aban- 
donment of  the  old  legal  fiction  that  taxes  are  paid  for  pro- 
tection,'—  so  p.ilpable  an  absurdity  that  it  is  strange  that 
it  coutd  ever  have  gained  the  currency  which  it  even  now 
enjoys.  It  is  probable  that  tiie  ancient  fiction  is  maintained 
because  our  jurists  have  so  generally  failed  to  give  proper 
attention  to  economics,  and  have  never  grasped  the  funda- 
mental principles  of  taxation.  Something  must  be  said,  and 
knowing  notliing  better,  it  is  still  repealed,  "  taxes  are  pay- 
ment for  protection,"  although  the  law  itself  refuses  to  recog- 
taxation  any  of  the  principles  which  apply  to  purchase 
and  sale,  and  contracts  and  debts  resulting  therefrom.  More 
will  be  said  hereafter  about  the  reason  why  taxes  are  paid.- 

Taxes  are  transfers  of  economic  goods  or  things  which 

'  This  idea  is  implied  in  Monlexquiru's  definition  or  tixes:  "Thi? 

public  revenurs  are  a  portinn  which  each  subject  gives  uf  his  pruperty 

InorderlosecutB  and  enjoy  the  remainder."    "  Esprit  de»  Lois,"  XIII.  7. 

"  No  one  it  admilled  la  ihe  bar  in  f  rjince  and  Prussia  who  ha)  nut 

I'iicil  pt>lilical  eciinoniy.     Our  beat  law  schoots  are  beginning  tn  in- 

Katdeiit  liciioa  in  question  will,  il  a  to  be  hoped,  ere  long  be  laid  lu 
with  Ihr  contract  theory  of  the  i^^igiI1  of  the  slate. 


8  INTRODUCTION. 

have  value.  Taxes  are  generally  paid  in  money,  but  not 
necessarily.  Formerly  it  was  common  in  llie  American 
colonies  to  receive  commodjries  in  payment  of  taxes. 
When  taxes  were  paid  "  in  kind,"  much  was  said  about  the 
lean  kine  used  for  this  purpose  in  New  England.  Rhode 
Island  prescribed  certain  rates  at  wliich  various  commodities 
should  be  received  by  the  public  treasury  for  taxes ;  and  it 
is  probable  that  careful  research  would  discover  similar  legis- 
lation in  every  one  of  the  original  thirteen  colonies.' 

Taxes  for  certain  purposes  are  still  paid  in  labor  in  many 
of  our  states.  These  are  chieHy  taxes  for  construction,  - 
maintenance,  and  improvement  of  roads  in  country  districts. 
These  taxes  are  "  worked  out,"  as  the  jihrase  is.  They  are 
like  the  old  French  corvies,  which  were  one  of  the  abuses 
of  the  ancien  rfgime,  and  are  a  partial  explanation  of  the 
abominable  roads  at  the  present  time  in  most  parts  of  the 
United  States.  "  Road  duty  "  in  cities  is  usually  replaced  by 
a  general  tax,  hut  in  the  city  of  Atlanta,  Ga.,  those  who  fail 
or  refuse  to  pay  this  and  other  taxes  in  money  are  obliged 
to  work  on  tlie  streets  at  the  rate  of  thirty-five  cents  a  day 
until  their  taxes  are  thus  paid.' 

Taxes  arc  demanded  of  citizens  usually,  but  foreign  resi- 
dents are  after  a  period  generally  treated  like  citizens  with 
respect  to  most  taxes.  Non-resident  foreigners  are  taxed 
when  they  own  property  in  the  country  laying  the  tax.  This 
is  always  the  case  with  real  estate,  and  sometimes  with  per- 
sonal property.  The  tax  on  real  estate  is  a  tax  on  things. 
It  is  like  a  first  charge  on  its  revenues,  and  ia  raised  regard- 

1  The  treasure  of  New  Haven,  for  example,  wn'  nuthnriicrl  to  receive 
Indian  corn  al  2i.  4</.  per  bushel  in  payment  of  lown  lavii  or  rales. 
Sec  Lcvennorc'a  "  Republic  of  New  Haven,"  Ballimore,  l8S6,  page  74. 

'  The  lat  in  Atlanta  is  (3.50.  and  all  males  belM-een  the  ago  of 
sixteen  and  fifty  are  wbject  to  this  tax;  truly  n  "grievoui  and  op- 
pressive "  burden. 


I 


TAXES  DEFINED.  9 

less  of  ownership.  It  often  practically  amounis  to  partial 
public  ownership  in  the  property.  The  English  income  lax 
on  shares  in  corporations,  slocks  and  bonds,  is  collected 
bom  corporations  and  from  banks  paying  interest  or  divi- 
dends,' and  lakes  no  account  of  the  fact  that  ihe  owner  o( 
the  stocks  and  bonds  may  be  a  non-resident  foreigner. 

It  is  expressly  provided  in  most  of  our  st.ites  in  which  a 
poll  tax  exists  that  aliens  are  subject  to  it,  and  the  corap- 
tloUer-general  of  Georgia  in  his  book  of  ■'  Instructions  "  spe- 
cially  calls  the  attention  of  tax-receivers  to  the  fact  that 
aliens  are  liable  for  the  poll  tax. 

Taxes  on  foreigners  are  justified  on  the  ground  that  they 
must  derive  some  benefit  from  the  existence  of  the  govern- 
ment taxing  them,  and  in  so  far  such  taxes  may  be  regarded 
as  a  payment  for  protection,  for  it  cannot  be  held  thai  the 
duties  of  citizenship  devoive  upon  foreigners.  It  may  also 
be  urged  that  if  foreigners  are  taxed  by  our  government,  oiu' 
citizens  will  probably  be  taxed  by  foreign  governments,  and 
that  the  sum  which  we  collect  from  foreigners  will  approxi- 
mately equal  the  sum  that  foreign  governments  collect  Jrom 
our  citizens.  A  rough  kind  of  justice,  atxiul  as  accurate  as 
can  be  atlained  in  matters  of  taxation,  is  thus  effected. 

The  element  of  might  also  undoubtedly  enters  into  taxa- 
tion, and  the  mere  fact  that  a  foreigner  is  so  situated  that  he 
can  be  forced  to  contribute  to  the  expenses  of  government 
is  at  times  held  to  be  sufficient  reason  for  placing  a  lax  upon 
him.' 

'  Coupnni  are  generally  made  payable  at  some  bank,  and  when  any 
English  bank  pays  them,  it  must  deduct  the  income  [an  and  p.iy  it  tn 
the  govcmment. 

*  ll  may  be  further  urgeil  ihnt  a  man  owei  cerlain  ijuties  lo  humanity, 
ud  if  he  faiU  III  Jiacbarge  Ihe  oSioes  of  citizenship  at  home,  it  is 
clhically  allowable  fut  a  foreign  government,  which  cnn  lay  its  hands  on 
him,  to  force  bim  lo  do  his  pan  louraids  ifac  sappart  of  govcmmenl. 


10 


INTRODUCTION. 


A  burden  is  sustained  by  common  sacrifices,  and  by  con::i 
mon  is  meant  according  to  some  fixed  rule,  applicable  to  a 
class  of  persons  or  a  class  of  property,  but  not  necessarily  *.0 
all  persons,  still  less  to  all  property.    Certain  persons  may  not 
individually  and  without  the  application  of  any  common  rule  i 
be  selected  for  the  maintenance  of  government,  or  lo  bear  a  I 
public  burden.    This  would  be  confiscation  and  not  taxation,  J 
and  in  the  United  Stales  would  be  prohibited  by  that  provis- 
ion of  our  federal  constitution  which  provides  that  private   ' 
property  must  not  be  taken  for  public  use  without  adequate 
compensation.     The  constitution  of  Illinois  provides  in  Art- 
icle IX.,  section  i ,  that  the  general  assembly  shall  have  j>ower    ' 
lo    lax   pedlcrs,  auctioneers,  hrokere,  hawkers,  merchants, 
commission- merchants,  and   other   persons  enumerated,  as 
well  as  toli-bridges,  ferries,  insurance,  telegraph  and  express 
interests,  and  persons  or  corporations  owning  or  using  fran- 
chises and  privileges,  in  such  manner  as  it  shall  direct  by 
general  law,  but  the  tax  must  be  "  uniform  as  to  the  class 
upon  which  it  operates."'    Stite  constitutions  often  prescribe 
what  kind  of  taxes  shall  be  levied,  or  how  they  shall  be 
levied.     Thus  Article  XV.  of  the  Declaration  of  Rights  o(    ' 
Maryland  provides  that  every  person  in  the  state,  or  holding 
property  therein, "  ought  to  contribute  his  proportion  of  pub- 
lic taxes  for  the  support  of  government,  according  to  his  1 
actual  worth  in  real  or  persona!  property."     It  is  held  that   ' 
this  would  prevent  an  exemption  of  certain  classes  of  per- 
sonal   property  from   taxation,  although   the    principles 
taxation  would  sanction  such  an  exemption. 

■  In  Si.  Mary's  County,  in  MBrjIand.  ■  lax  wai  once  laid  upon  all 
Uwyen  wilhin  the  county  for  Ihe  repair  of  Ihe  tuurl'house.     1 
mriuus  instance  ofn  Uk  laid  upon  all  members  of  clnsi.     It 
dcntljr  sapposcJ  IhaC  laivyecs  derived  a  peculiar  advantage  fi 
exillence  of  toutl-hooses,  aod  accordingly  thought  fa 
make  a  siwcial  cmitribulioti  for  Iheir  maintenance. 


A 


TAXES  DEFINED. 


11 


Judge  Cooley,  in  his  work  on  "Taxation,"'  gives  a  decision 
of  llie  Court  of  Appeals  of  Kentucky,  which  held  a  law  un- 
constitutional because  it  required  a  portion  of  one  street  in  a 
city  to  be  improved  in  an  exceptionally  expensive  manner,  at 
the  cost  of  abutting  property  owners,  and  that  without  their 
consent,  whereas  the  law  required  a  petition  from  property 
owners  in  other  portions  of  the  city,  before  street  improve- 
ments could  be  ordered.  The  following  is  an  extract  from 
the  opinion  of  the  court :  "  A  law  imposing  taxation  on  the 
general  public,  the  evident  intent  and  legitimate  results  of 
which  are  to  equalize  the  burden  so  far  as  practicable,  will 
not  be  held  as  violative  of  the  fundamental  law  merely  be- 

t cause  that  desirable  end  may  not  lie  attained.  Bui  when,  as 
in  this  case,  the  most  probable,  if  not  the  necessary,  conse- 
(jucQce  of  the  law  is  to  produce  the  most  oppressive  inequal- 
i^,  and  lo  compel  a  small  minority  of  tax-payers  to  provide 
■t  their  sole  expense,  an  improvement  of  general  utility  and 
public  interest,  the  construction  of  which  costs  more  than 
double  as  much  as  the  character  of  sucli  improvements  in 

k general  use,  and  from  which,  when  constructed,  the  general 
public  derives  almost  as  much  advantage  as  themselves,  it 
assumes  the  character  of  an  attempted  exercise  of  arbitrary 
power  over  the  property  of  this  minority ;  it  becomes,  in  a 
constitutional  sense,  a  taking  and  appropriation  of  their  pri- 
vate property  to  the  public  use  without  compensation." 

This  decision  harmonizes  with  the  conception  of  the  defi- 
nition.    When  common  burdens  are  placed  upon  the  citi- 
«eas,  these  may  be  called  taxes ;   but  when  a  portion  only 
of  the  community  are.  without  good  and  sufhcient  reason 
■  but  by  arbitrary  exercise  of  power,  separated  from  their  fel- 
F  low-citizens  and  commanded  to  bear  public  burdens,  it  can 
\  be  regarded  only  as  confiscation.    Good  and  sufficient  reason 
■  Page  489. 


1 Z  INT  ROD  UC  T/O.V. 

for  taxing  all  property  of  a  class,  and  not  all  classes  of  prop- 
erty, may  be  fouad  in  the  principles  of  taxation.  Real  estate 
owners  cannot  claim  that  their  property  is  confiscated  because 
they  are  taxed  while. owners  of  such  personal  property  as 
mortgages  and  promissory  notes  are  not  taxed  on  their  prop- 
erty, for  the  reason  that  the  ground  of  exemption  is  public 
policy.  It  is  held  that  the  benefits  of  this  exemption  are 
diffused.  Similarly,  dealers  in  the  commodity,  sugar,  could 
not  enter  a  plea  that  a  tax  lajd  on  sugar  and  not  on  all  com- 
modities was  confiscation,  since  the  manifest  intention  of  a 
legislature  in  laying  such  a  tax  law  must  be  to  provide  for 
a  common  burden  by  common  sacrifices,  for  it  holds  that 
the  tax  will  be  shifted  by  dealers,  and  thus  diffused  through- 
out the  community.  Where  a  small  income,  like  S6oo,  is  ex- 
empted from  a  general  income  tax,  those  who  pay  an  income 
tax  have  no  ground  for  complaint,  because  indirect  taxes, 
which  probably  comprise  the  major  portion  of  taxes  ii 
civilized  countries,  bear  more  heavily  on  the  poorer  cIj 
than  on  the  rich  and  well-to-do,  and  because  there  are  fur- 
ther technical  reasons  for  this  exemption  found  in  the  ad- 
miitistrative  machinery  of  government,  since  the  expense  of 
collecting  an  income  tax  from  those  whose  incomes  are  small 
is  excessive,  taking  far  more  from  the  pockets  of  the  tax- 
payeis  than  ever  reaches  the  public  treasury.  More  may  be 
said  on  this  point,  and  the  foregoing  is  simply  by  way  of 
illuslralion.  Taxes  must  appeal  to  the  conscience  of  the 
community  as  fair  and  equitable,'  for  the  moral  sense  of  the 
community  has  always  had,  and  doubtless  always  will  have, 
great  weight  in  judicial  decisions  touching  taxation  as  well 
as  other  matters. 

'  Tbe  constitation  of  Muuctoseltt  ptOTide*  tbat  asKssments.  rales, 
and  taxes  shall  be  "  pcupoclionol  and  reuooable."  CQaslilution,  Pari 
U.,  Chipler  1.  |  t,  Ailide  IV. 


CHAPTER  II. 

GENERAL  PROPOSITIONS  RESPECTING  TAXES. 
TAXES  ARE   NOT  PAYMENTS  IN   EXCHANGE. 

IT  is  well  to  specify  some  things  which  taxes  are  not,  in 
order  to  bring  out  more  clearly  what  they  really  are,  and 
first  of  all,  I  will  elaborate  further  the  idea  of  which  men- 
tion has  already  been  made,  that  taxes  are  not  one  part  of  an 
exchange  of  services. 

This  has  been  implied  in  the  definition.  They  are 
one-sided  transfers  of  goods  or  services,  and  are  not  mu- 
tual. The  citizen  pays  because  he  is  a  citizen,  and  it  is 
his  duty  as  a  citizen  to  do  so.  It  is  one  of  the  conse- 
quences which  flow  from  the  fact  that  he  is  a  member  of  or- 
ganized society.  Man,  as  a  human  being,  owes  services  to 
his  fellows,  and  one  of  the  first  of  these  is  to  support  govern- 
ment, which  makes  civilization  possible.  Only  an  anarchist 
can  take  any  other  view.  To  the  ordinary  man  it  appears 
right  that  he  should  be  called  upon  to  give  not  only  his 
property  for  the  promotion  of  common  interests,  but  even 
his  life,  if  need  be.  He  asks  only  that  it  shall  be  by  some 
common  rule.  While  the  citizen  and  all  human  beings  de- 
!  rive  benefits  from  the  existence  of  government,  these  bene- 

Ifits  come  lo  them  as  citizens  and  as  human  beings.  A 
failure  to  pay  taxes  never  works  a  forfeiture  of  the  common 
lights  of  citizens,  and  the  pauper  who  receives  from  the 
community  instead  of  paying  to  it,  has  inalienable  rights  as 


I 


14  iNTRODVCTIOl^. 

the  expensive  machinery  of  government  will  be  placed  at  his 
disposal.  Nor  can  I  even  urge  that  I  have  not  received 
protection,  as  a  plea  for  non-payment  of  taxes.  The  police 
and  the  fire  department  may  both  have  failed  to  protect  my 
person  and  my  property  as  they  should  have  done,  but  that 
fact  will  not  be  regarded  as  a  justification  for  a  deduction 
from  the  annual  tax  on  my  house.'  Nor  yet  can  I  go  before 
the  courts  and  urge  that  as  I  require  no  protection  from  the 
state.  I  should  be  relieved  from  taxation.  I  am  not  aUowed 
to  undertake  to  protect  my  own  person  in  lieu  of  the  pay- 
ment of  taxes.' 

Judge  Coolcy,  after  making  a  concession  to  the  old  fiction 
of  reciprocity  in  taxation,  adds  as  a  justification  of  taxation, 
*'  the  exclusi\*e  sovereignty  and  jurisdiction  of  the  state  o>*er 
the  persons  and  property  within  its  territor}-,"  *  evidendy 
feeling  the  insufficiency  of  such  justification  as  is  "  foimd  in 
the  reciprocal  duties  of  protection  and  support."     .As  1 

*  A  rec«nt  writer  wdl  nrs  that  the  laws  of  insurance  and  contiMt 
do  n<>t  afkpiy  to  taxes.  When  my  hoose  bums  down  or  a  thief  robs  ni^ 
I  am  not  indemnilieti  oat  of  the  pahlic  tremsarr. 

*  The  correct  doctrine  of  taxation  is  ably  stated  in  the  **  Report  of  the 
Masaadittsetts  CommtssiiMiers  relating  to  Taxation  *"  made  in  1S75.  "  A 
■Mn  is  taxed,^  says  this  Report,  **  not  to  pay  the  sUte  for  its  expense  in 
protecting  him,  and  not  in  any  respect  as  a  recompense  to  the  state  for 
UT  Krnce  m  his  bduU,  b«t  becaase  his  onginal  relanv^ns  to  soderr 
reqnire  k.  .\n  the  enjoyments  whic^  a  man  can  recent  from  his 
fnopaty  oome  frvsm  his  connection  with  sodcty.  Cot  off  from  all 
social  relations  a  man's  weahh  wonld  be  useless  to  him  In  fac!,  there 
conld  be  no  saoch  thing  as  w^eaith  witboax  society.  Wealth  is  what 
«ay  be  cxc^n(*ed.  and  requires  few  its  very  exifitenre  a  camrnuniry  of 
penons  with  reciprocal  wants.  ...  It  is  wise  and  ri|i!ht,  theacforc,  fa- 
un indixSdoal  to  contribute  of  his  weahh  what  the  true  xsteresss  1.^ 
•ociety  require^  and  this  he  does,  not  aft  a  pay»aii  for  the  gins  which 
tocien'  has  conferred.^      C^^^^  ><^} 


GENEKAL   PROPOSITIONS  RESPECTING    TAXES.    IJ 


take  it,  from  a  purely  legal  view,  the  fact  of  sovereignty  may 
be  regarded  as  sufficient  justification,  and  the  attempt  to  add 
to  that  leads  to  confusion  of  thought. 

The  ethical  view  has  a  larger  scope.  The  duties  to  one's 
fellows,  frequently  imposed  by  law,  are  perhaps  alone  suffi- 
cient ethical  justification.  More  may,  however,  be  said. 
The  general  public  through  the  agencies  of  organized  gov- 
ernment is  a  partner  in  production,  and  is  in  this  capacity 
entitled  to  a  share  of  all  that  is  produced.'  If  any  one  doubts 
that,  let  him  put  to  himself  the  question,  How  great  would 
be  the  production  of  wealth,  did  no  government  exist? 

Now  if  government  is  an  indispensable  condition  of  produc- 
tion, it  is  as  truly  a  factor  of  production  as  any  natural  agent 
or  as  labor,  and  is  as  truly  entitled  to  a  share  of  wealth.  What 
this  share  shall  be,  however,  is  determined  by  its  own  sover- 
eignty, and  not  by  principles  of  private  exchange.  Still 
further,  society,  of  which  one  manifestation  is  government, 
is  present  in  ail  production.  No  such  thing  as  strictly  indi- 
vidual production  of  wealth  exists  in  any  modem  community. 
How  much  can  be  produced  on  a  strictly  individual  basis 
can  be  ascertained  by  one  who  will  isolate  himself  in  the 
heart  of  Africa,  or  on  the  plains  of  South  America,  or  even 
in  otir  own  fertile  West,  and  have  no  dealings  whatever  with 
others.  .Ml  modem  production  is  truly  social,  and  the  de- 
pendence of  the  individual  is  felt  in  a  thousand  and  one 
ways.  Where  a  division  of  labor  obtains,  and  we  produce 
for  others,  we  are  dependent  upon  these  others.  If  they  fail 
to  produce,  we  receive  nothing  in  exchange.  The  activity 
of  our  competitors  in  production  is  also  of  vital  importance, 
as  is  the  competilion  of  those  who  desire  to  obtain  the  things 

.  reccnl  pnmphlct  on  taiation,  by  Mr.  C.  M.  Armslrung,  of  B«Ui- 
bcan  the  tide  of  ''The  CuaiantecU  I'ailnu  of  the  Tai-Payet,' 
thereby  the  Uate  and  dty. 


J 


16 


INTRODUCTION. 


I 


I 


which  we  wish  in  exchange  for  our  commodities.  The  fact  j 
that  an  individual  lives  \a  modem  society  and  enjoys  its! 
blessings,  gives  that  society  an  ethical  claim  upon  the  indi-  I 
vidual.' 

This,  it  seems  to  me,  is  also  a  valid  reply  to  Henry  1 
George's  views  on  the  nature  of  taxes.  Curiously  enough  ,1 
he  is  in  this  respect  what  some  might  call  an  ultra-conserva- 
tive, for  he  does  not  believe  in  taxes  at  all,  but  holds  them 
to  be  robbery.  The  annual  rental  value  of  land  in  itself 
apart  from  improvements,  is  due  to  the  exertions  of  the 
community  at  large,  according  to  the  theory  of  rent  as  gen- 
erally accepted.  Now  Mr.  George  says,  let  society  take 
its  own,  namely,  rent,  and  defray  all  social  expenses  there- 
from ;  but  what  I  have  produced  individually  by  my  own 
exertions  is  mine  by  natural  right  against  all  the  world,  and 
if  the  public  takes  a  part  of  it,  I  am  robbed.  These  are  not 
his  own  words,  but  this  is  a  succinct  statement  of  one  of  hia 

1  iiiwhy  ahouUI  1  be  robbed  of  my  property  to  pay  for  teaching  ( 
anolhct  man's  children?'  is  an  individualist  question  which  '\i  not 
quently  put  as.  \i  it  settled  the  whole  busincu.  Tcrhaps  i(  does,  but  I 
find  difficulties  in  seeing  why  it  should.  The  parish  in  which  I  live 
nukes  n>e  pay  my  share  for  the  p&ving  and  lightitig  of  a  gcent  many 
■treets  that  I  never  pass  through;  and  I  might  plead  that  1  am  robbed 
to  smooth  the  way  and  lighten  the  darkness  of  other  people.  Rut  I  am 
afraid  the  parochial  authorities  would  not  let  me  off  on  this  plea;  and  | 
I  must  confess  that  I  do  not  sec  why  they  should.  I  cannot  speak  ol  - 
my  own  knowledge,  but  I  have  eveiy  reason  to  believe  that  1  came  into 
this  world  a  small,  tedilish  person,  certainly  wilhoat  a  gold  spoon  in 
my  mouth,  and  in  fact  with  no  disieinible  abitracl  or  concrete  '  rights" 
or  property  o(  any  description.  If  a  fool  was  not  at  once  set  upon  me 
as  a  squalling  nuisance,  il  was  cither  the  natural  affection  of  those  about 
me,  which  I  certainly  had  done  nothing  to  deser^-e,  or  the  [car  of  the 
law  which,  ages  before  my  birth,  was  painfully  built  up  by  the  society 
into  which  I  intruded,  that  prevented  that  catastrophe.  If 
ished,  caied  for,  taught,  saved  bom  the  vagabondage  of  i 


I 


^M    ^refill 


GENERAL  PROPOSITIONS  RESPECTING    TAXES.    17 

cardinal  positions.  The  truth  is,  there  is  in  modem  society 
no  such  individual  production  as  Mr.  George  assumes. 

What  have  1  produced  alone  and  unaided  ?    Nothing. 

What  more  than  has  been  said  is  needed  as  a  justification  o{ 
taxation?  And  does  not  this  avoid  the  confusion  of  thought 
which  inevitably  results  in  every  legal  and  economic  treatise 
in  which  it  is  attempted  to  apply  the  principles  of  barter  or 
exchange  ?  It  is  perhaps  hazardous  to  criticise  so  eminent  a 
jurist  as  Judge  Cooley,  whose  learning  and  capacity  entide  him 
to  the  universal  esteem  in  which  he  is  held  ;  but  is  not  the  fol- 
lowing quotation  an  illustration  of  the  natural  results  of  an 
attempt  Co  reconcile  things  which  are  essentially  irreconcila- 
ble? 

"  It  is  no  objection  to  a  tax  that  the  party  required  to 
pay  it  derives  no  l.ienefit  from  the  particular  burden,  e.g.  a 
tax  for  school  purposes  levied  upon  a  manufacturing  corpo- 
nition.  But  in  truth  benefits  always  flow  from  the  appropri- 
atiOD  of  public  money  to  such  purposes,  which  corporations, 

certui-lf  Eun  not  sware  tbal  I  did  anything  (o  deserve  those  advantgiges. 
And,  if  I  possess  anylhing  now,  it  strikes  me  Ihil,  though  I  may  bave 
furly  earned  my  day's  nages  for  my  day's  work,  and  may  justly  call 
Ihtm  my  propeity,  yet,  without  that  organUnlion  of  society,  created  out 
of  the  toil  and  blood  of  long  generations  before  my  time,  I  should  prob- 
ably have  bad  nothing  but  a  flint  axe  and  an  indifTetent  hut  to  call  my 
tnnt;  and  even  those  would  be  mine  only  bo  long  as  no  stronger  savage 
cmme  my  way.  So  that  if  society  having  —  <;uite  gratuitously  —  done 
til  tbcM  things  for  me,  asks  me  in  turn  to  do  something  towards  its 
prenrvatioa,  —  even  if  that  something  is  to  contribute  to  the  teaching  o( 
other  men's  children,  —  I  really,  in  spile  of  all  my  individualist  leanings, 
feel  rather  ashamed  to  sey  no.  And  if  I  were  not  ashamed,  I  cannot 
My  that  I  think  thai  society  would  be  dealing  unjustly  with  me  in  Con- 
verting the  moral  obligation  into  a  legal  one.  There  is  a  manifest 
letting  all  the  burden  be  borne  by  the  willing  horse."  — 
fr9fiss»r  Huxtiy,  r»  Ais  article  "  The  Struggle  for  ExiiliHct"  pti^ 
HiMtd  IM  tkt  "  Nintleenth  Cintury  "  Magatitupr  Ftbruary,  j8SS. 


I 


i3  INTRODUCTION. 

in  common  with  natural  persons,  receive  in  the  additiood-^ 
securily  to  their  property  and  profits."  ' 

But  this  security,  which  it  is  said  results  from  education,  i 
called  in  question,  and  there  are  those  who  would  have  us  think 
that  widely  diffused  education  renders  property'  less  safe.  Sup- 
pose the  tan-payer  convinces  himself  that  his  taxes  diminish 
the  security  of  his  property,  and  even  convinces  judge  and 
jury,  what  then?  The  reader  should  also  consult  in  this 
connection  the  statements  on  pages  i6  and  17  of  Cooley  on 
'■  Taxation."  It  is  slated  that  as  taxation  and  protection  are 
reciprocaJ,  — which  is  only  another  way  of  saying  that  taxes 
are  payment  for  services  rendered,  an  exchange,  —  "the 
taxes  levied  by  any  government  ought  to  be  apportioned 
among  the  people  according  to  the  benefits  which  each  re- 
ceives from  the  protection  the  government  affords  him,"  and 
straightway  the  learned  jiidge  adds,  but  "  this  is  manifestly 
impossible.  The  value  of  life  and  liberty,  and  of  the  social 
and  family  rights  and  privileges,  cannot  be  measured  by  any 
pecuniary  standard."  Mr.  Thorold  Rogers  is  also  quoted 
witli  approval,  to  the  effect  "  that  if  taxation  were  deter- 
mined by  the  comparative  protection  accorded  to  individuals,  1 
women  and  children  should  pay  a  higher  rate  than  strong  J 
and  healthy  adults,  since  they  have  more  need  of  assistance  ;  1 
and,  if  the  law  be  effectual,  get  more."  How  then  can  h© 
add  in  the  same  paragraph,  that  the  assumption  which  pre- 
scribes taxation  in  proportion  to  benefits  received,  "  is  suffi-iJ 
ciently  near  the  truth  for  the  practical  operations  of  govem>g 
ment  ?  " 

TAXES  ARE  NOT  DEBTS, 

Second,  Taxes  are  not  debts. 

They  are  not  based  on  contracts,  either  express  or  i 
•  "Taxalion,"  page  3,  foot-note. 


GENERAL  PROPOSITIONS  RESPECTING    TAXES.    19 

plied ;  they  are  the  contributions  demanded  by  sovaftgr 
in  which  the  taxing  power  is  inherent  and  with  u4iich  it  is 
co-extensive.  Laws  which  apply  to  debt  do  not  apply  t 
taxes ;  and  the  abolition  of  imprisonment  for  debt  would 
not  cany  with  it  alxjlition  of  imprisonment  for  failure  to  pay 
taxes,  did  the  law  at  the  time  provide  such  a  remedy  for 
non-payment  of  taxes.' 


THE  POWER  TO   IMPOSE  TAXES  !S   LEGlSEjVTIVE. 

This  is  another  way  of  saying  that  taxation  and  represen- 
tation go  together.  This  phrase,  "  taxation  and  representa- 
tion go  together,"  never  signified  in  law  that  every  tax-payer 
should  have  the  right  of  suffrage.  It  simply  means  that  the 
legislature,  composed  of  representatives  of  the  people,  se- 
lected, now  in  this  way,  now  in  that,  must  vote  the  taxes, 

I  and  as  such,  the  maxim  has  become  one  of  the  established 
principles  of  constitutional  government.     There  have  been 

f  always  and  everywhere  those  excluded  from  the  right  of  suf- 
frage, and,  as  is  so  well  said  in  Cooky  on  "Taxation,"  "so 

f  long  as  all  persons  cannot  participate  in  government,  the 
limits  of  exclusion  and  admission  must  always  be  determined 

[  by  considerations  of  general  public  policy.'" 

3  stated  in  our  constitutions  that  tlie  power  to  provide 
s  by  levying  taxes  pertains  to  the  legislature.     Two 

\  typical  quotations  from  American  constitutions  are  the  fot- 

j  lowing :  "  The  general  assembly  shall  provide  such  revenue 

'  djoiey.  I.e.  page  13. 

*  Page  45.  The  eipt.ination  given  in  the  same  place  of  the  me.in- 
I.  lag  of  Ihe  iiJIying  cry  of  American  revululiunisis,  no  taialion  without 
L,TepteKnUtion,  seems  to  me  most  (aiisfactory,  It  was  maintained  that 
Fl«3talifln  fnr  ihe  caluniet  was  the  right  uf  the  local  legslalure,  and  ihnt 
'   Ihe  English  Parliament  which  laid  taxes  iva.s  a  botty  in  which  they  had 


ZO  INTRODUCTlOhr. 

as  may  be  needful,"'  and  "that  no  aid,  charge,  tax,  burden.  I 
or  fee  ought  to  be  raiL'd  or  levied  under  any  pretence  with-1 
out  the  consent  of  the  legislature,"  * 

A  stiil  further  restriction  of  the  power  to  levy  taxes  i 
found  in  constitutional  monarchies,  for  in  these  it  is  regarded  ' 
as  imporLint  to  confine  the  right  to  the  lower  house.  The 
form  of  the  Queen's  speech  to  P.irliament  on  its  opening 
points  this  out  clearly,  and  is  a  beautiful  illustration  of  a 
historical  evolution,  wrapped  up  in  a  few  words,  The  j 
"Speech  from  the  Throne"  read  on  Feb.  9,  1887,  will-| 
serve  as  an  example.  It  begins,  "  My  Lords  and  Gentle-  ' 
men,"  and  proceeds  at  once  to  discuss  the  relations  existing  ' 
between  England  and  other  powers.  It  is  mentioned  that 
"cordial  assurances  of  friendly  sentiments  as  well  i 
earnest  desire  to  maintain  the  peace  of  the  world"  are 
received.  The  speech  next  touches  upon  the  Afghanistan 
boundary,  and  after  referring  to  Abyssinia,  Canada,  Amer- 
ica, and  other  countries,  proceeds,  "Gentlemen  of  the  1 
House  of  Commons :  The  estimates  for  services  f 
which  have  been  laid  before  you,  have  been  framed  with 
a  due  regard  to  economy."  When  the  subject  of  linan- 
ccs  is  left,  the  style  of  the  address  immediately  changM 
again,  and  the  speech  proceeds  with,  "  My  Lords  and  Gen- 
tlemen :  The  measure  which  at  great  labor  you  passed  last 
session  for  the  benefit  of  Ireland,"  etc.  Thus  is  the  finan- 
cial control  of  the  House  of  Commons  recognized  in  the 
forms  employed  in  the  speech  from  the  throne  in  England. 

It  was  doubtless  a  feeling  acquired  in  England  which  led 
our  forefathers  to  provide  in  the  federal  constitution  that  reve- 
nue bills  should  originate  in  the  House  of  Representatives. 
The  provision  appears  to  amount  to  very  little  at  present,  for 

1  Conslitution  of  Illinoi!,  Artklc  IX..  wction  i. 

of  Maijland.  Decimation  uf  itlghls,  Alljclc  XJV. 


I 

i 


I 


GENERAL  PROPOSITIONS  RESPECTING    TAXES.    21 

the  Senate  through  its  power  of  amending  bills  seems  to  have 
as  much  control  of  the  finances  as  the  lower  house.  Should 
a  fierce  and  protracted  struggle  between  the  House  and  Sen- 
ate ever  break  out,  like  struggles  in  England  between  ihe 
House  of  Lords  and  the  House  of  Commons,  it  is  not  im- 
probable that  the  Representatives  would  seek  to  curtail  the 
power  of  the  Senate. 

Both  branches  of  our  state  legislatures  are  elected,  and  it 
is  considered  that  it  makes  very  little  difference  in  which 
house  revenue  bills  are  originated.  It  is  indeed  oCtec 
expressly  provided  in  our  stale  constitutions  that  such  bills 
may  originate  in  either  house,  as  for  example  in  the  consti- 
tutions of  lUiuois,'  Maryland,"  New  York,*  and  Florida.*  The 
restriction  to  the  lower  house,  of  the  right  to  originate  bills 
for  raising  revenue  appears  to  be  regarded  as  of  less  impor- 
tance than  it  once  was,  for  the  constitution  of  Mississippi 
of  1S31  contained  such  a  provision,  whereas  it  was  dropped 
from  the  constitution  of  186S.' 

Representation  does  not  always  go  with  taxation ;  for  the 
District  of  Columbia  is  governed  by  Congress,  and  the  peo- 
ple of  the  District  are  disfranchised.  The  territories  are 
represented  in  Congress  only  by  delegates ;  but  the  people 

'  Artide  IV.,  section  1 2. 

^Artide  III.,  section  27, 

•Article  HI.,  section  13. 

*ArticleV.,  aeciion  la. 

•The  constilutioii  of  many  of  the  ilales  i 

that  billi  for  rusin};  revenue  must  originate 

arc  N.  H.,  Muss.,  Me,,  Vi.,  N.  J.,  Pa.,  In. 

Ten.,  0«.,  Col.,  S.  C,  Ga.,  Ala.,  La.     In  ro 

M  provided  Ibat  Ihe  senate  may  propose  aiuendments.  as  in  Ihe  case  of 
bills,  while  four  provide  ihal  no  new  matter  not  relating  to  the 
lae  may  he  introduced.  These  ore  Me..  Vt.,  Del.,  K7.  See  Stim- 
"  American  Stalnle  Law,"  Volume  I.,  page  79. 


:ill  retain  the  old  provision, 
n  ihe  lower  house.  These 
„  Minn..  Neb.,  Del.,  Ky., 
Ill  of  these  conslilutions  ft 
rndmenIS,  as  in 


22  mmODVCTIOK. 

living  in  them  are  subject  to  the  indirect  federal  taxes,     ft  I 
cannot  in  (act  be  said  that  ihe  power  lo  tax  always  belongS>fl 
to  the  legislature  power,  for  there  are  countries  like  Russia, 4 
which  have  no  tnie  legislation  ;  but  it  can  be  laid  down  s 
a  general  principle  with  respect   to    modem  constitution^] 


TAXES  ARE  REOUUIR  AND  ORDERLY   CONTRlmmONS. 

The  word  taxes  comes  from  Tofti  {ordo'),  and  indicates 
something  regularly  recurring ;  and  taxes  differ  ihus  from  sub' 
sidles  granted  by  Parliament  lo  the  king  in  time  of  urgent 
necessities.  These  subsidies  were  also  at  times  called  aids.. 
Forced  loans  and  eontribulions  are  likewise  different  (romi 
taxes  in  this  respect,  for  they  are  irregular  and  tyrannical  exac- 
tions. Benevolences  of  early  daj's  were  sometimes  gifts,  as  the, 
word  signifies,  and  at  other  limes  irregular  exactions ;  and 
in  either  case  they  were  not  taxes,  fur  taxes  are  not  volun- 
tary offerings,  although  they  are  often  paid  willingly,'     It  is 

'  The  beticvulcnces  of  catly  limes  w 
than  laxes,  ullhau);h  the  nuid  appears 

t<i  tales;   natuislly,  it  would  uften  be  a  matter  of  indifTecence  whether 
B  benevolence  — leolly  a  forced  conlribution  — were  tcganled  ai  a 


t 

I 


.  the  naluie  of  loaai 
n  used  as  et]iiivatent 


It 


:>  Dowell,  that 


h  bore 


.tcb- 


tively  small  part  of  the  public  burdens,  and  that  these  benevolences, 
which  Ihcy  culd  well  aFTord  to  pay,  equalized  mailers  somewhat  An 
aiiiuiing  nccounl  is  told  i<f  a  benevolence  which  the  handsome  Edward 
IV.  exacted  of  a  rich  widow.  Expccling  scarce jfio,  he  received^ao, 
which  the  widow  paid  him  with  the  words,  "  By  my  Irolh,  for  Ihy 
lovely  cuiintenance  thou  shall  have  even  /^lo";  whereupon  the  king 
did  "  lovinglie  "  kiss  her,  and  received  for  this  royal  favor  (tnolher^ZO, 
either,  as  an  ancient  writer  said.  "  becnusc  she  esteemed  the  kiss  of 
k  king  so  precious  a  pcatic  "  or  "  incause  the  flavour  of  his  breath  did 
■o  comfort  her  stomach."  Benevolences  were  condemned,  and  ns  such 
abolished,  by  a  statute  of  Richard  III.  See  "  History  of  Taialion  and 
Taxes  in  England,"  by  Dowell,  Volume  I.,  pages  :56-9. 


I 


GEffERAL  PROPOSITIONS  RESPECTING   TAXES.     23 

to  be  noticed,  whether,  that  the  words,  aids  and  subsidies, 
have  also  been  used  for  true  taxes.  The  word  has  been 
after  its  meaning  has  been  changed.  More  will 
be  said  of  this  in  the  following  chapter.  Tribute  has  some- 
times been  used  as  etiuivalenl  to  taxation,  but  it  is  more 
properly  restricted  to  its  usual  meaning  of  forced  contribu- 
tions levied  by  a  victorious  foreign  power. 

WHAT  IS  CALLED   A   T.\X    IN   ONE  PLACE  IS   NOT  ALWAYS 
CALLED   A  TAX   IN  ANOTHER. 

The  law  is  more  or  less  arbitrary  in  declaring  what  shall 
be  regarded  as  a  tax ;  and  the  action  of  the  courts  in  inter- 
preting the  laws  is  far  from  uniform.     It  was  held  in  Illinois, 
L  for  example,    that  a  highway  assessment  payable  in  labor 
I  was  not  a  tax,  whereas  in  Nevada  an  assessment  of  four  dol- 
1  lars  or  two  days'  labor  on  each  male  inhabitant  between  the 
■ges  of  twenty-one  and  sixty  years,  was  held  to  be  a  poll  tax, 
a  tax  which  was  in  that  state  unconstitutional.^ 

This  is  an  illustration  of  the  extent  to  which  definitions 
lare  arbitrary  both  in  law  and  political  economy.  Nature 
i  not  separated  by  sharp  lines  from  all  other  objects 
I  any  one  object  to  which  we  give  the  name  tax,  as  she  has 
I  Separated  a  horse  or  a  tree  from  other  natural  objects.  The 
■'Word  is  an  arbitrary  sign  for  a  somewhat  varying  and  shifting 
Irlea.  Tlie  best  thai  can  be  done  in  sucli  cases  is  to  con- 
n  with  what  at>pears  to  Iw  the  best  usage,  and  to  work 
T  harmony,  simplicity,  and  unity  in  expression. 

THE  POWER  OF  TAXATION  CANNOT   BE    DELEGATED. 

This  is  a  general  provision  applicable  in  modem  con- 
ititutional  governments.     The  power  to  tax  is  delegated  to 

'  Coolcy,  page  ii,  tmle*. 


24 


INTRODUCTION. 


the  legislature;  but  the  general  rule  holds  that  a  delega- 
ted power  cannot  be  delegated  by  its  recipient  to  others. 
Judge  Cooley  speaks  of  the  power  of  local  political  units 
as  "  one  clearly  defined  exception  "  to  the  rule  which  has 
existed  from  time  immemorial,  and  one  which  as  a  tradi- 
tional right  has  been  tacitly  or  expressly  incorporated  in 
state  constitutions.  The  power  is  frequently  limited  and 
regulated  both  by  constitutions  and  laws.  But  even  with 
respect  to  the  local  political  units,  it  holds  that  the  dele- 
gated power  cannot  be  transferred.  Some  cities  existed 
prior  to  the  sovereign  states  of  which  they  are  now  part, 
and  retain  such  sovereign  rights  as  have  not  expressly 
been  taken  from  them.  This  is  very  often  the  case  in 
Europe,  and  is  a  principle  of  the  law  of  the  cities  in  Ger- 
many. 


CHAPTER  III. 


THE  ORIGIN  AND  GROWTH  OF  MODERN  TAXATION. 


TAXATION  AS  WE   NOW  UNDERSTAND  IT,   A   NEW  THING. 

WHILE  something  in  the  nature  of  taxes  may  be  found 
even  in  the  most  ancient  history,  it  is  safe  to  say  that 
taxation  as  we  now  understand  the  term  is  something  new  in 
the  world's  history.  We  now  consider  taxes  as  a  regularly  re- 
curring burden  falling  upon  ail  inhabitants  of  a  country,  and 
we  expect  taxes  to  defray  the  greater  portion  of  the  heavy 
and  increasing  expenses  of  our  various  governments. 

It  is  not  consistent  with  the  plan  of  the  present  work  to  dis- 
cuss the  revenues  and  expenditures  of  ancient  states.     It  may 
be  remarked,  however,  that  the  budget  of  any  state  that  ever 
existed  before  the  nineteenth  century  would  be  almost  in- 
significant when  compared  with  the  budgets  of  England, 
France,  Germany,  and   the   United  States    to-day,     Grotc 
estimates  the  annual  expenditures  of  Athens  in  the  brilliant 
age  of  Pericles  at  one  thousand  talents,  say  one  million  two 
I  hundred  thousand  dollars.'    War  was  then  made  self-support- 
I  ing  by  plunder  and  tribute,  and  victorious  nations  derived  a 
\  revenue  from  it      Foreigners  were  looked  to  for  revenue  as 
I  vi  habitual  thing*  and  personal  services  were  exacted  from 


•  In  his  "  Public  Economy  of  Athens,"  I^ndon,  1828,  Boston,  1857, 
[  Boeekh  says  ibat  the  revenues  of  that  city  never  CKCeeded  two  ihousand 
I  talents. 

'  The  proleclion-mone)'  of  the  resideat  aliens  was  an  importanl  item 
I  in  the  budget  gf  cbsiicd  Athens. 


26 


INTRQDUCTlOff. 


13  Is  were    ^^H 

I 


ciriiens  which  were  often  quite  burdensome.     Officials 
also  remunerated,  as  in  more  recent  limes,  by  fees,  and  offices 
were  often  a  source  of  net  re\'enue  rather  than  of  expense,  as 
is  usual  in  modem  times. 

What  we  would  call  indirect  taxation,  existed  in  both 
(keece  and  Rome,  but  it  was  evidently  regarded  as  payment 
for  privileges.  Imported  and  exported  commodities  were 
taxed ;  but  this  tax  was  doubtless  held  to  be  a  proper  pay- 
ment for  the  privilege  of  bringing  goods  into  the  country,  and 
was  put  in  the  same  category  as  harbor  fees  for  the  use  of  the 
harbor,  or  market  charges  for  the  use  of  the  public  market. 
These  import  and  export  duties  were  purely  for  revenue  ;  for 
they  were  the  same  on  exported  as  on  imported  commodi- 
ties, and  appear  to  have  been  what  we  would  call  ridiculously 
low.  We  hear  much  of  a  charge  of  a  fiftieth,  and  ten  or 
twelve  per  cent,  on  imports  and  exports  was  regarded  aa 
exorbitant ;  whereas  we  in  the  United  States  are  not  startled  by 
taxes  of  fifty  and  one  hundred  per  cenL  on  imports.  Boeckh 
divides  the  revenues  of  .Athens  into  regular,  ordinary  revenues, 
and  irregular  and  extraordinary  revenues.  The  regular  reve- 
nues are  by  him  divided  into  four  classes,  namely :  "  Duties 
(n'Ai;)  arising  partly  from  public  domains,  including  the 
mines,  partly  from  customs  and  excise,  and  some  taxes 
upon  industry  and  persons,  which  only  extended  to  the 
aliens  and  slaves  ;  lines  (rt^ijfuiTu)  together  with  justice  fees 
and  the  proceeds  of  confiscated  propeKy ;  tributes  of  the 
allied  or  subject  states  (^poi) ;  and  regular  Liturgies 
(Xttrovpyuii  tyKWiAloi)." 

None  of  these  rei  enues  imply  modem  notions  of  taxation. 
It  is  to  be  ob5er\-ed  in  studying  the  revenues  of  ancient  and 
mediseval  states  that  what  appears  to  be  taxation  is  often  only 

1  Bpok  III..  I. 


ORIGIN  AND  GROWTH  OF  MODERN  TAXATION.   27 

payment  for  service  or  for  the  use  of  property.  Ancient 
tithes  are  an  example.  Where  these  were  levied  in  Greece, 
they  were  as  a  rule  payment  for  the  public  property,  for  the 
public  domain,  and  ought  to  be  called  rent  raiiier  than  taxes. 
The  land  of  subjugated  peoples  became  the  property  of  the 
conquerors,  and  the  payments  exacted  for  its  use  were  like- 
wise rent,  rather  than  taxes,  k  poll  tax  was  also  exacted  of 
subjugated  foreigners,  which  was  a  mark  of  subjugation  and 
inferiority.  "As  the  land  has  less  value  if  it  is  subject  to 
an  impost,  so  are  men  more  degraded  if  they  pay  a  poll 
tax,  for  it  is  a  token  of  captivity."  These  words  are  from 
Tcrtullian,'  and  express  a  view  also  held  during  the  reign  of 
the  Carlovingian  dynasty;  in  fact,  even  up  lo  the  present 
century  traces  of  the  view  that  taxes  were  unworthy  of  free- 
men can  be  found.  Direct  taxes  on  land  held  in  fee-simple 
were  regarded  as  less  degrading  than  taxes  on  persons,  but 
these  were  borne  with  impatience,  and  Boeckh  asserts  that 
no  stich  tax  was  laid  before  the  Peloponnesian  war."  It  is 
certain  that  before  that  time  other  revenues,  especially  those 
from  the  state-owned  mines,  were  so  superabundant  that  sur- 
plus revenue  was  distributed  among  the  citizens  of  Athens. 
There  are  those,  however,  who  hold  that  taxes  were  laid  in 
early  times  both  in  Greece  and  Rome,  and  who  even  go  so 
far  as  to  claim  that  the  right  of  taxation  in  time  of  need  was 
I  fully  acknowledged.  This  seems  a  rather  strong  expression, 
I  but  there  appears  to  be  reason  for  the  view  that  both  Greece 
k  .«nd  Rome  passed  from  an  early  period  of  taxation  to  one 
\  of  freedom  from  taxation,  a  time  of  great  prosperity,  and 
then  back  again  to  a  period  of  heavy  and  increasing  taxa- 


'  TerlDll.,  Apalog.  13,  qaoted  from  Bdeckh,  111.,  i. 

IVB  that  the  lirat  regular  property-lax  wu  occasioned  by  the 
[eof  Milylenc  in  406  B.c.,and  be  quotes  Ihc  lealimony  of  Thaqrdidci. 


28  INTRODUCTION. 

tion  in  the  time  of  their  decline  and  fall,'  How  light  the 
extiaordinary  taxes  on  property  were  is  amply  demonstrated 
by  Boeckh  by  numerous  examples."  It  appears  that  the 
average  annual  tax  paid  on  the  property  of  Demosthenes  by 
his  guardians  amounted  to  only  one-fiflh  of  one  per  cent. 
on  its  valuation,  or  about  one-eleventh  of  the  rate  in  New 
York  City  in  1887.  The  Athenians  regarded  a  tax  of  one 
and  two-thirds  per  cent,  as  something  so  exorbitant  as  not 
to  be  seriously  contemplated. 

The  hturgies  were  somewhat  like  unpaid  offices.  They 
were  regarded  as  a  mark  of  distinction  and  involved  large 
expenditures  for  the  entertainment  of  the  citizens  or  the 
defence  of  the  country.  The  acceptance  of  these  offices 
was  compulsory,  but  as  a  rule  more  was  performed  by  the 
recipients  of  the  offices  than  was  required,  and  they  appear 
to  have  been  held  to  be  an  oppressive  burden  only  in  a  time 
of  declining  wealth  and  waning  patriotism. 

Liturgies  were  also  known  in  Rome  and  became  a  source 
of  corruption  and  plutocratic  rule.  The  tediles  were  ex- 
pected to  contribute  to  the  expenses  for  the  amusement  of 
the  people,  and  the  office  of  sedile  was  a  stepping-stone  to 
the  remunerative  offices  in  the  provinces  which  were  thus 
rendered  accessible  only  to  the  wealthy.  The  office  of  "  Rex  " 
in  the  carnival  of  New  Orleans  resembles  an  ancient  liturgy 
save  that  its  acceptance  is  not  obligatory.  It  is,  however,  held 
to  be  an  honor  to  receive  it,  as  it  was,  in  the  best  days  of  Ath- 
ens, to  perform  a  liturgy.  It  is  said  to  cost  f  10,000,  and  is  to 
that  extent  a  contribution  of  a  rich  man  to  a  public  amuse- 

>  CoDipace,  in  addition  lo  Boeckh,  "  Die  Stcuer  nach  dcr  Steuer 
fBhigkeil."  von  Fr.  J.  Neum»nn,  Jena.  :88o  (Separat-Abdruck  bu»  den 
Jahcbilcbern  fUi  Nationaloekonomie  und  SlalislikJ,  alio  Roscher"* 
"  FinaniWBsenschaft,"  Book  III.,  Chapter  IV. 

*  Boeckh,  IV.,  7. 


ORIGIN  AND  GROWTH  OF  MODERN  TAXATION.   29 

The  office  of  police  justice  in  New  York  City  has,  at 
mes,  certain  features  which  remind  one  of  the  Etiiles.     Po- 
lice justices  give  picnics  and  entertainments  to  those  resid- 
g  in  their  election  districts,  which  cost  large  sums. 

s  interesting  to  iiutice  from  a  recent  essay  on  "  Taxation 
D  Japan,"  that  in  the  old  feuila!  period  of  that  country's  his- 
^  tory  the  rich  were  singled  out  for  special  taxation  as  fur  a 
compulsory  public  subscription,  "  that  is  to  say.  the  govern- 
ment forced  the  rich  citizens  of  a  city  or  town  to  make  such 
^ subscriptions  for  the  public  treasury  as  the  government  a.sked 
ifcr.     This  corresponds  to  the  English  '  benevolences '  under 
the    Tu dor- Stuarts. " '      'ITiis  essay  shows,  further,  that  for 
gEnerations  the  principal  public  burdens  were  met  by  a  labor 
tax  and  by  payment  of  a  sort  of  rental  for  the  land,  which 
appears  to  have   belonged  to  the    sovereign,  in  theory  at 
least.     It  was  in  the  nature  of  a  tithe.     Japanese  taxation 
can  be  traced  back  to  87  b.c,  and  took  its  origin  in  a  labor 
tax,  expressed  in  days'  work,  for  every  inhaiiitanl  of  middle 
age,  regardless  of  sex.      Such  a  tax  would   naturally  bear 
LiPDre  heavily  on  the  poorer  classes,  and  the  special  forced 
Beontributions  from  the  rich  may  have  been  an  attempt  to 
»mpel  them  lo  bear  more  nearly  their  fair  share  of  the  pub- 
:  burdens.     These  two  features  of  taxation  in  Japan,  the 
r  lax  and  the  land  tax,  or  more  properly  rental,  appear 
D  have  been  prominent  in  all  Asiatic  countries  with  which 
;  are  familiar. 

The  ideas  of  Rome  in  the  age  of  Cicero  are  well  illus- 
taled  by  a  passage  in  his  work  "  De  Officiis."  Cicero  says  : 
"Care  should  also  be  taken  lest,  as  was  often  the  case 
r  our  ancestors,  on  account  of  the  poverty  of  the 


^^froUdcalS 


"Taxation  in  Japan,"  by  Shiro  Shiba. 
Scisnce,  Volume  I.,  pigr  94 


Wharton  School  Annals  of 


INTRODUCTION. 


treasury  and  the  continuity  of  wais,  it  may  be  necessary 
to  impose  taxes,  and  it  will  be  needful  to  provide  long 
before  that  this  should  not  happen.  But  if  any  necessity 
for  such  a  burden  should  befall  any  state  (for  I  would  rather 
speak  thus  than  speak  ominously  of  our  own  ;  nor  am  I  dis< 
cussing  about  our  own  state  only,  but  about  all  states 
general),  care  should  be  taken  that  all  may  understand  that' 
they  must  submit  to  the  necessity  if  they  wish  to  be  safe. 
What  could  better  illustrate  the  difference  between  ancient 
and  modem  ideas  of  finance?  Cicero  spoke  of 
ily  of  taxation  with  hesitation,  and  was  careful  to  point  out 
that  his  remarks  were  purely  general,  as  if  to  predi 
ation  in  Rome  were  something  terrible  and  unpatriotic,  be- 
traying a  lack  of  confidence  in  the  future  of  his  own  state. 
Much  as  if  one  should  now  predict  the  overthrow  of  our 
existing  social  order  in  the  near  future  by  socialism  I 
it  is  probable  that  Cicero  did  have  Rome  in  mind,  his 
protestations  to  the  contrary  notwithstanding  ;  for,  if  Plutarch 
may  be  relied  upon,  a  tax  was  levied  in  43  B.C.,  the  year 
after  Cicero  wrote  the  "  De  Officiis,"  although  for  over  one 
hundred  and  twenty  years  the  Roman  people  had  b 
relieved  of  taxes  by  successful  wars. 

THE  REVE>fUES  OF  THE  STATE   IM  THE  MIDDLE  ACES. 

The  patrimonial  idea  of  the  state  obtained  in  the  early  \ 
Middle  Ages  when  the  sovereign  regarded  the  stale  as  his  j 
own.  and  at  times  claimed  the  right  to  dispose  of  it  by  will,  J 
3  sell  il,  as  if  it  were  a  piece  of  private  property,  f 
Brandenburg,  which  has  become  Prussia,  serves  as  an  illus- 
tration. Odio  the  Lazy  became  involved  in  debt  in  the  1 
fourteenth  century,  and  soM  his  tight  as  mai^ave  for  4 
florins,   and    thereafter    Brandenburg   was    mort- 


1 


ORIGIN  AND  GROWTH  OF  MODERN  TAXATION.  31 

gaged,  divided,  sold,  and  tniDsferred  like  a.  private  estate 
until  it  came  into  ttie  possession  of  the  HohenzoUems  in 

J4«5- 

When  such  ideas  obtained,  it  was  natural  to  expect  the 
monarch  to  defray  all  expenses  of  government,  for  no 
distinction  was  made  between  his  public  and  private  ex- 
penses ;  they  were  all  his  own,  just  as  all  employes  under 
the  sovereign  were  servants  of  the  prince,  whether  employed 
in  his  household  or  in  public  business.  They  were  all  called 
JUrstliche  Dieiter,  servants  of  the  prince,  and  it  wajs  only 
at  a  later  period  that  the  term  Staatsdieiter — slate- servants 
—  was  employed,  and  then  these  were  separated  from  the 
Hofdiener  —  servants  of  the  court.' 

Large  domains  were  set  apart  for  the  support  of  the  sov- 
ereign, both  in  his  public  and  private  capacity,  here  indis- 
tinguishably  blended  ;  and  revenues  which  would  have  been 
private  for  any  one  else,  were  public  as  well  as  private.  It 
was  a  favorite  tlieory  of  law  and  practice  that  all  private 
property  of  a  prince  became  public  the  moment  he  as- 
cended the  throne,  and  it  was  so  declared  in  France  by  law 
in  1607.  It  has  thus  in  modem  times  become  extremely 
difficult  to  separate  public  from  private  property,  and  this 
has  led  to  complications.  This  also  explains  confiscations 
which  were  often  regarded  as  a  mere  resumption  by  the 
public  of  property  which  had  always  belonged  to  the  public, 
but  which  had  been  set  apart  for  a  lime  for  certain  special 
purposes.  Land  was  held  on  feudal  tenure,  which  means 
that  the  nominal  owners  were  only  tenants,  from  whom  a 
return  to  the  crown  was  due.     Various  fees  and  duties,  and 

'  SlaatiditHir  and  SiutilsJieiiil  arc  employed  in  the  Prussian  code 
of  Frtdeiick  the  Gtcul  —  dai  priusiiickt  allgtmtini  Landrtcht.  On 
thU  whole  lubjecl,  see  that  excetleni  Utile  work,  "  Der  Slaatsdienst  in 
IB,"  by  aemens  Theadcn  Perthes,  Hirobutg,  1838. 


33 


INTRODUCTION. 


Other  special  rights  of  the  crown,  called  "  regalia,"  furnished 
revenues.  The  Jews,  particularly  in  England,  were  made  to 
contribute  heavily  to  the  support  of  the  crown,  from  which 
they  were  supposed  to  derive  special  protection.  The  very 
mieresting  monograph  on  "  The  Exchequer  of  the  Jews  of 
England  in  the  Middle  Ages,"  by  Charles  Gross,  Ph.D.,' 
gives  valuable  information  on  this  point.  It  appears  that  ' 
the  cities  on  the  Continent  derived  revenue  from  the  Jews 
more  frequently  than  did  the  sovereign,  "  In  Germany  the 
crown  became  weaker  and  weaker,  fjarting  with  most  of  its 
prerogatives,  among  which  was  the  control  of  the  Jews,  to- 
gether with  the  right  to  tax  them.  VVhat  the  German  towns- 
men .  .  .  really  sought  from  the  king,  and  often  secured, 
was  permission  to  have  Jews  among  them,  from  whose  ple- 
thoric purses  they  could  borrow  money,  and,  above  all,  | 
squeeze  heavy  taxes.  In  England,  on  the  other  hand,  the 
crown  clung  tenaciously  to  ihis,  as  well  as  to  its  other  re- 


The  revenues  derived  from  the  Jews  may  be  divided  into 
four  classes :  namely,  reliefs,  escheats,  iines,  and  tallages. 
Relief  was  an  inheritance  tax,  which  generally  amounted  to 
one-third  of  the  estate ;  while  escheats  were  forfeitures  for 
crimes  and  offences,  real  or  imaginary,  —  for  slaughtering 
Christian  children,  coin -clip  ping,  counterfeiring,  and  the 
like,  and  it  is  said  that  it  was  found  convenient  to  bring  false 
accusations  against  the  Jews  when  the  treasury  of  the  king 
needed  replenishing.  Fines  were  used  in  a  broad  ; 
and  included  what  we  might  term  fees.  They  were  paid  for 
permission  to  marry  or  even  not  lo  marry,  and  for  the  priv- 
ilege of  changing  one's  residence.     Tallages  were  simply 

'  Landon.     Office  of  the   Jruiuh,   ChronUIt,  a  Finibury  Sqauc    t 
1887.  ' 

*  Grow,  page  4. 


ORIGIN  AND  GROWTH  OF  MODERN  TAXATION.   33 

taxes,  sometimes  poll  taxes  or  capitation  taxes,  but  generally 
taxes  assessed  in  proportion  lo  one's  means.  Dr.  Gross 
males  that  the  average  annual  tallage  did  not  greatly  ex- 
ceed £,iaQ<i  in  the  reign  of  Edward  I. ;  but  at  that  time 
the  entire  revenue  of  the  crown  was  only  about  ^65,000. 
It  is  evident  that  the  Jews  then  paid  altogether  considerably 
over  one-tenth  of  these  revenues.' 

An  interesting  account  of  a  forced  loan  levied  in  Frank- 
fort-on- the- Main,  during  the  Thirty   Years'  War,  not    only 
illustrates  the  treatment  of  the  Jews,  but  is  a  further  indica- 
tion of  the  character  of  financial  operations  in  the  Middle 
Ages.     The   essay  from  which   this  account  is    taken  was 
based  on  a  study  of  original  documents,  and  appeared  in 
\  the   VVechenblatt  dcr  Frankfurter  Zeiliin^  for  Jan.  i,  1888. 
I  Frederick  V.  of  the  Palatinate,  and  the  chosen  king  of  Bohe- 
mia, when  defeated  by  the  emperor,  look  refuge  in  Holland, 
\  and  later  proceeded  against  his  enemies,  wilh  his  general, 
Ernst  von  Mansfeld.     When  near  Frankfort  he  sent  word  to 
the  Jews  that,  as  their  protector,  he  was  entitled  to  a  yearly 
payment ;  that  this  had  not  been  received  for  some  years ; 
and  that  he  now  wanted  all  that  was  due,  in  addition  to 
6000  ihaler.     The  Jews  were  astonished,  for  they  had  never 
heard  of  this  protectorship  before.    They  did  not  refuse, 
^  but   delayed    payment   on    various    pretexts.     Christian    of 
f  Brunswick,  in  the  meanwhile,  approached  Frankfort  from 
\  another  side,  and  demanded  10,000  gulden  from  Frankfort, 
I  promising  to  leave  the  Jews  immolested,  on  condition  that 
I   he   received    ihe    sum.     He  justified    the    demand    on  the 
'   ground  that  the  Jews  were  lawful  pri?.c  in  time  of  war.     Fi- 
nally, when  ihese  two  were  defeated,  the  Eraperor  Ferdinand 
II.  pretended  that  the  Jews  had  paid  to  the  city  treasury 


34  INTRODUCTION. 

10,000  thaler  for  his  enemies,  and  on  this  account  he  feigned 
great  unger,  and  demanded  the  10,000  ihaler  himself,  and 
received  that  sum. 

The  view  gradually  gained  ground  that  the  office  of  si 
ereign  was  simply  a  public  trust,  and  that  the  king  ruled  by 
right  divine,  and  not  as  the  owner  of  a  piece  of  properly. 
It  then  became  natural  to  exact  from  the  people  assistance 
for  the  support  of  a  government  in  which  tliey  could  claim  a 
real  interest. 

Yei  pven  Jean  Bodin,  in  the  latter  lialf  of  the  sixteenth 
century,  in  his  worlc  "  De  la  R^puljlitjue,"  prefers  revenues 
from  public  domain  to  all  others  for  the  support  of  govern- 
ment, and  speaks  of  taxes  in  a  manner  which  reminds  one 
of  Cicero.  He  says  a  Christian  prince  will  resort  lo  them 
as  rarely  as  possible.  Montesquieu  expresses  similar  opin- 
ions about  the  desirability  of  revenues  from  domains  in  his 
"  Esprit  des  Ix>is."  Braunschweig-Wolfenbtittel  declared  in 
the  old  German  Reichstag,  in  1653,  that  taxes  were  contrary 
to  the  nature  of  the  state  because  one  entered  into  civil 
society  to  protect  one's  property  and  not  to  have  it  taken 
away.  The  words  used  for  taxes  are  significant,  for  they  ' 
show  how  taxes  were  regarded.  What  were  really  taxes 
were  called  aids  and  subsidies'  and  benevolences  i^mb- 
sidium,  adjutorium,  pttitio.  Bede).  They  were  someliiing' 
irregular  and  unusual,  something  supplementary  to  other 
revenues,  and  were  granted  by  the  estates  of  the  realm 
as  a  favor,* 

'  A  tax  for  the  benefit  □(  the  Lord  rto|)tictor  of  Marylnnd,  laid  hy 
the  assembly  of  1641  and  1642  was  colled  "An  oct  f.ir  granting  a  lub- 
ledye."  See  "Sketch  of  Tax  LcgisliitUin  in  Maryland,"  iti  "Report 
of  the  Maryland  Tax  Comraisiion  "  in  iSSS,  page  ""■ 

'  When  ill  ibis  ecniury  KacI  [.uHwiu  vnn  Ilallcr.  in  his  "  Reslaiira- 
Uao  dec  StaalSHisiicnschiifl  "  (,»x  vol.iuicB,  1S16-26),  denied  the  tight  of 


ORIGIN  AND  GROWTH  OF  MODERN  TAXATION.   35 


TAXES    LONt;    MOLD  t 


Taxes  were  long  held  to  be  somelhing  merely  secondary 
and  subordinate,  and  it  was  necessary  to  show  first  the  in- 
sufficiency of  other  revenues.  Taxes  may  still  be  considered 
as  something  subordinate  in  a  modem  budget,  as  the  state- 
ment of  receipts  and  ex|>enditures  is  called.  First,  an  esti- 
maie  is  made  of  expenditures,  then  of  revenue  from  fixed 
sources  of  income,  in  particular  from  productive  property  of 
the  stale  or  municipality,  or  other  local  political  units,  and 
finally  direct  taxes  are  levied  to  meet  the  deficiency.  This 
deficiency  is  now  larger  than  the  revenues  from  other  sources 
in  most  states ;  and  when  to  direct  taxes  we  add  indirect, 
perhaps  the  only  modem  states  which  derive  a  major  por- 
tion of  their  revenues  from  domains  and  public  works,  are 
four  of  the  German  states.  What  was  once  m,erely  sup- 
plementary, and  is  now  in  budgets  often  treated  as  sub- 
ordinate, yields  the  greater  portion  of  all  revenues.'  The 
old  forms  often  continue,  however.  As  late  as  1809  an 
edict  of  Nassau,  countersigned  by  Marschall,  recognized  the 
principle  that  taxes  should  be  raised  only  lo  cover  deficien- 
cies after  the  revenues  from  the  public  domains  and  from 
the  regalia  had  been  exhausted.  Article  tog  of  the  consti- 
tution of  Wlirtemberg,  treats  first  of  the  needs  of  the  state  ; 
I  second,  of  the  revenues  from  the  crown  land  j  and  third,  of 


I 


iMlion  ind  claimed  thai  it  was  more  filling  for  Ihe  masler  (the  sover- 
jgo)  la  support  hii  lervanU  (the  subjtcls)  thin  Id  icvckc  the  process, 
I  sounds  indeed  like  a  voice  ftom  the  lombs.     See  Rdschcr,  I.e. 

Sec  my  Introdoclion  to  Wotlhington'i  ■■  Hiiloricnl  Sltelch  of  the 

Finances  of  Pennsylvania,"  Volume  II„  No.  3,    Publications  of  the 

American  Economic  Association,  Ballimoie,  18S7. 


36 


INTRODUCTIOI^. 


the  deficiency  still  required  to  provide  for  the  expenditures 
of  ihe  state.  The  German  authority,  von  Seckendorff,  says 
the  revenues  of  the  domains  are  destined,  first,  for  the  sup- 
port of  the  royal  family ;  second,  for  payment  of  the  civil 
service  employes;  third,. for  emhassies;  fourth,  for  castles, 
fortresses,  streets,  etc. ;  fifth,  for  churches  and  schools  ;  sixth, 
for  amtisements  and  entertainments.' 

As  the  modem  state  developed  by  means  of  consolidation 
and  concentration  of  scattered  powers,  as  standing  armies 
took  the  place  of  plundering  baronial  troops,  and  as  payment 
in  money,  and  exchanges  through  the  medium  of  money, 
took  the  place  of  barter  and  truck,  and  as  paid  'ervices 
took  the  place  of  compulsory  services  like  the  <urvies  of 
France,  the  needs  of  the  state  continually  increased,  and 
the  insufficiency  of  old  sources  of  revenue  became  year 
by  year  more  manifest.  The  wasted  resources  of  the  princes 
must  be  added  to  the  causes  which  increased  the  fre- 
quency of  taxes.  Weak  princes  squandered  their  public 
and  private  property,  much  as  the  people  of  the  United 
States  are  doing  at  the  present  time.  Strong  princes  in 
parliamentary  states  found  it  easier  to  raise  revenues  by 
sale  of  public  property  than  by  taxation.  Feudal  conditions 
were  revoked,  and  tenants  became  fee-simpte  proprietors, 
and  thus  the  many  were  robbed  for  the  few.  Theft  and 
usurpation  by  nobles  still  further  diminished  public  land, 
just  as  English  and  Scotch  nobles,  and  others,  are  robbing 
us  of  our  vast  treasures,  while  a  careless  and  indifferent  and 
corrupt  Congress  wastes  its  time  in  petty  wrangles  and  sense- 
less partisan  controversies,  refusing  to  pass  laws  for  the  pro- 
tection of  the  public  domain  which  have  met  with  the  all 
but  unanimous  approval  of  upright  and  thinking  citizens. 

'  Sec  Ros;:hct'9  "  FinaiuwiSieiiscbari,"  Book  1.,  Chapter  I.  §  g. 


I 


ORIGIN  AND  GROWTH  OF  MODERN  TAXATION.   37 

Thus  it  happened  that  taxes  increased  in  frequency,  until 
they  became  regulaiiy  recurring  burdens,  and  contributions 
which  were  once  of  a  more  or  less  voluntary  character  be- 
came compulsory.  There  is  an  old  proverb  to  the  effect 
that  he  who  gives  three  times  establishes  a  claim  against 
himself.  This  has  been  true  in  finance.  New  Haven  offers 
a  curious  illustration.  "  In  the  autumn  of  1644,  the  town 
began  its  annual  contributions  for  the  support  of  poor  scholars 
at  Harvard  College.  The  offering  consisted  of  a  peck  of 
wheat,  or  the  value  of  the  same,  from  every  one  '  whose  hart 
is  wilhng.'  The  largess  lost  its  voluntary  character  and  was 
regaid4|l  as  a  tax.  The  collectors  of  cojlege  corn  were  regu- 
larly elected  town  officers  until  the  end  of  the  colonial  ex- 
istence." ' 

In  this  same  year  an  interesting  note  in  the  Records  of 
the  Colony  of  Massachusetts  Bay  in  New  England  shows 
that  a  similar  request  was  nude  in  that  colony.  The  Records 
of  the  General  Court  read ;  "  It  is  ordered  yt  y*  deputies 
shall  cornend  it  to  y*  sev'all  towns  (&  y*  eld's  are  to  be 
desired  to  give  their  furth'ance  hereto)  w*  declaration  of 
y*  co'se  w^  was  ppouoded  by  y*  said  comissioncrs,  &  hath 
bene  put  in  practice  already  by  some  of  y*  other  colonies, 
viz. :  of  ev*y  family  alow*  one  peck  of  come,  or  r  a""  in  mony 
or  0th'  coiiiodity,  to  be  sent  in  to  y*  Treasurer  for  the  col- 
ledge  at  Cambridge,  or  where  else  hee  shall  appoint,  in 
Boston  or  Charlstowne." '  The  implied  voluntary  character 
of  the  offering  is  noteworthy.  It  may  be  doubted  whether 
in  reality  it  ever  had  any  voluntary  element  at  all.  Our 
Puritan  ancestors,  with  their  stern  ideas  of  duty  and  their 
readiness  to  apply  a  vigorous  boycott  to  obnoxious  individu- 


aore,  "The  Republic  of  New  IIkvcd,"  page  77. 
e  11.,  page  S6. 


38  mTRODVCTIOtf. 

als,  would  probably  have  made  things  most  uncomfqrtable 
for  any  one  who  should  have  objected  to  hb  share  of  the 
contribution. 

A  curious  act  of  the  Assembly  of  the  Province  of  Mary- 
land, dated  1650,  is  worthy  of  notice  in  this  connection. 
It  is  entitled  "An  Order  for  the  Relief  of  the  Poor,"  and  it 
directs  that  an  "  equal  assessment "  be  levied  on  such  inhab- 
itants of  St.  Mary's  County  as  will  not  make  a  willing  contri- 
budon  for  the  maimed,  lame,  and  blind.' 

The  proprietary  government  of  Maryland  was  succeeded 
by  the  convention  of  June,  1774,  and  this  formed  a  tempo- 
rary government  in  the  following  year  on  the  basis  ofi^'  Arti- 
cles for  Association."  This  endured  for  two  years  longer, 
or  until  1777,  and  during  that  lime  the  government  was 
supported  by  contributions  which  were  called  voluntary,  but 
the  following  quotation  from  the  "Sketch  of  Tax  Legisla- 
tion in  Maryland"  throws  a  vivid  light  on  the  development 
of  finance :  "  In  every  county,  contribution  or  subscription 
lists  were  presented  to  the  inhabitants.  If  any  person  de- 
clined to  contribute,  his  name  and  his  refusal  were  noted, 
and  then  consequences  followed  which,  in  those  times,  were 
more  serious  than  a  tas  sale.  In  one  county'  the  names  of 
those  refusing  were  directed  to  be  recorded  in  perpetual 
memoty  of  their  principles ;  in  others  they  were  publicly 
declared  by  county  resolutions  enemies  to  America,  and 
as  such  published  in  the  Maryland  Gastlte  reported  to 
committees  of  observation,  etc.  As  the  unfortunates  who 
were  so  injudicious  as  to  allow  themselves  to  be  returned 
delinquent  became  the  objects  of  distrust  and  aversion,  and 

'  "Report  of  Maryland  Tai  Caniniissoii  lo  Ihe  General  Anembly,'' 
Januaiy.  tSSS.    Part  entitled  "  Sketch  a(  Tax  Lcgi^lion  in  Maiylond, 


iiylond,''       ^^H 


I 


ORtGTN  AND  GROWTH  OF  MODERN  TAXATION.   39 

subjected  themselves  to  the  suspicion  of  Toryism,  with  its 
grave  consequcDces  of  arrest,  banishment,  and  confiscation, 
it  will  be  readily  believed  that  these  means  were  capable  of 
being  very  nearly  as  effective  as  compulsory  taxation."' 

It  was  undoubtedly  a  more  general  practice  in  earlier 
times  to  give  money  to  defray  the  regular  ordinary  expenses 
of  government  than  now,  while  at  the  present  time  it  is 
rinitbtless  true  that  more  is  given  for  specific  purposes, 
many  of  them  purely  public,  than  formerly.  The  Citizens  of 
Baltimore  and  Indianapolis  will  point  the  stranger  with  pride 
to  fine  public  buildings  constructed  for  less  than  the  appro- 
priations made  for  them.  Other  instances  of  large  results 
with  public  expenditures  can  readily  be  found,  and  it  will 
frequently  be  discovered  that  unpaid  services  of  citizens, 
who  desired  to  see  the  most  made  of  the  appropriations, 
contributed  to  the  success  of  these  undertakings.  A  gratify- 
ing eKamjjle  oflarge  results  with  small  expenditure  is  afforded 
by  the  Baltimore  Manual  Training  School. 

Citizens  of  Rhode  Island  maiie  voluntary  contributions 
toward  her  support  in  early  days.' 

Benjamin  Franklin  left  a  fund  of  _;^iooo,  which  was  to 
be  lent  to  young  married  coujiles  in  sums  not  to  exceed 
j£6o.  He  thought  that  this  would  at  the  end  of  a  century 
amount  to  ;£i3i,ooo,  when  _;^3i,ooo  was  to  be  devoted  to 
general  municipal  improvements.  He  directed  that  ;£^ioo,- 
ooo  should  be  retained  for  loans  to  young  married  couples 
until  the  expiration  of  the  second  century,  when  he  thouglit 
the  principal  would  be  equal  to  over  four  millions  of  pounds. 

'  "  Report  of  Maryland  Tax  Commission,"  iSSS,  page  cxxii. 

*  Prom  an  excellent  paper  on  Taxation  in  Rhode  Island,  by  H.  B: 
Gardner,  graduate  student  and  late  fellow  of  the  Johns  Hopkins  Uni- 
vosity.  >i  yet  an  unpublisbed  manuscript.  It  wilt  probably  appear  in 
Ihe  following  year  as  a  contribution  to  the  Johns  Hopkins  University 
ies  in  History  ajid  Political  Science, 


40  INTRODUCTION. 

It  was  then  to  be  divided  between  state  and  city.  The 
fund  now  amounts  lo  {73,321.00.  A  similar  fund  left  to 
Boston  amounts  to  over  $315,000.00.  One  of  the  pur- 
poses for  which  Stephen  Girard  left  his  immense  estate  to 
Philadelphia  was  lo  improve  the  city  "  and  diminish  lax- 
Examples  of  this  sort  continue  even  up  to  the  present. 
The  legacy  of  John  L.  Lewis  of  New  Jersey,  for  the  diminu- 
tion of  the  debt  of  the  United  States,  figures  in  the  finance 
report  for  the  year  ending  June  30,  1883,  for  $950,000.  The 
Duke  of  Brunswick  left  a  large  sum  of  money  a  few  years 
ago  lo  the  city  of  Geneva,  Switzerland,  which  was  used  lo 
pay  the  city  debt,  to  erect  a  monument  to  the  Duke,  and  to 
build  a  fine  opera  house.  These  instances  are  simply  by 
way  of  illustration,  for  it  would  not  be  possible,  without  a 
vast  amount  of  research,  lo  tell  the  exact  significance  of 
gifts,  and  their  amount  in  proportion  to  all  expenditures. 

The  use  of  lands  was  given  in  payment  for  services  in  the 
Middle  Ages.  We  may  say  that  the  offices  were  endowed, 
and  frequently  the  land  was  retained,  when  the  duties  of 
the  office  were  abolished  or  transferred  to  some  one  else. 
Thus  the  public  domain  was  diminished.  The  endowment 
of  the  English  churches  (glebe  lands)  continues  to  the 
present. 

Offices  were  sold  for  revenue  in  the  Middle  Ages.  This 
often  practically  amounted  to  a  sale  of  an  annuity,  for  the 
offices  were  in  many  instances  mere  sinecures.  Richelieu 
abolished  100,000  offices  which  had  been  for  the  most  part, 
it  appears,  established  in  order  to  be  sold.  The  civil  service 
became  so  poor  under  this  system  in  France   that  it  was 

•Sec  "Philadelphia  i6Si-i8S7,A  Hislorj  of  Municipal  Develop- 
ment."  by  Allinson  and  Peoruie,  Bailiroore,  1S87,  Chapter  UI. 


ORIGIN  AND  GROWTH  OF  MODERN  TAXATION.  41 

necessary  to  reconstruct  a  new  civil  service,  and  thus  the 
country  had  to  support  two  sets  of  officials,  —  the  sinecur- 
isis  and  those  who  did  the  work. 

Among  the  other  devices  for  raising  revenues  may  be 
mentioned  the  sale  of  titles.  This  was  actively  carried  on 
by  James  1.  of  England,  when  the  title  of  baron  brought 
^10,000,  and  that  of  an  earl  ^11,000.  The  feudal  dues 
paid  to  James  amounted  to  _;^iSo.ooo,  out  of  a  total  budget 
of  ^450,000.'  The  crown  lands  rented  for  ;£3i,ooo  at  this 
time,  and  the  rent  subsequently  rose  to  ^80,000.  Lotteries 
were  fonnerly  often  relied  upon  lo  defray  a  portion  of  the 
state  and  local  expenditures  in  this  country,  and  are  still 
used  for  that  purpose  in  two  of  our  states.  The  Louisiana 
lottery'  is  the  best  known  in  this  country.  Prussia  and 
other  European  states  still  support  lotteries,  and  one  reason 
why  in  some  places  all  private  lotteries  were  suppressed  was 
to  give  the  state  a  monoply. 

It  is  surprising  at  how  late  a  date  taxation,  as  we  now  un- 
derstand it,  came  to  be  relied  upon  as  the  regular  ordiuaiy 
source  for  the  major  portion  of  vast  public  expenditures. 
Indirect  taxes,  which  in  England  can  be  traced  to  the  twelfth 
century,  were  made  important  by  Charles  IL,  as  will  be  seen 
in  a  subsequent  chapter  of  this  work,  and  modern  public 
debts  were  first  established  in  the  reign  of  William  and  Mary, 
and  it  may,  perhaps,  be  said,  roughly  speaking,  that  modem 
ftnanciering  in  England  was  established  about  1 700 

•  Walker's  "  Political  Economy."  Part  VI.,  Cliaplm  XV.  and  XVI.. 
■nd  VVilion's  "  NalionnI  liudeel."  etc.,  Chapter  I. 

*  LouisiiiiB  derivcil  (140,000  from  the  Louiaiana  \jM.t:rj  Company  in 
18S2,  Kentucky  receives  S4000  a  year  Trom  a  lax  on  lotteries.  Ntn^ada 
derives  a  levcnuc  bom  "  gaming  licensu." 


INTRODUCTIOf!. 


TAXES   FIRST   PAID   ONLY   BV  THE  WEAK  AND   DEFENCELESS. 

Adam  Smith  says  that,  in  the  period  of  feudahsm,  only 
those  were  taxed  who  were  loo  weak  to  resist,  and  on  ac- 
count of  their  weakness  the  poorer  classes  have  always, 
even  up  to  the  present  time,  been  obhged  to  pay  an  undue 
share  of  taxes,  as  we  shall  see  hereafter.  It  is  now,  however, 
a  recognized  principle  that  taxes  should  be  laid  in  proportion 
to  abilities,  and,  while  this  principle  receives  many  different 
interpretations,  the  heavier  burdens  of  the  poor  at  the  pres- 
ent time  are  due  to  poor  systems  of  taxation  and  faulty  ad- 
ministration of  the  laws,  and  not  to  openly  expressed  principle. 
Adam  Smith  probably  had  France  particularly  in  mind,  and 
there  the  principle  was  widely  accepted  that  the  clergy  pro- 
tected the  country  by  their  pra>-ers.  the  nobles  by  their  arms, 
and  the  commons  by  the  taxes  they  paid.  These  ancient 
regulations  were  swept  away  by  the  French  Revolution,  and 
in  this  century  the  universality  of  the  duly  to  pay  taxes  has 
become  an  accepted  principle  of  political  science  and  of 
actual  practice. 

The  statement  of  Adam  Smith  is  confirmed  by  the  kinds 
of  taxes  which  were  employed  to  raise  the  revenues.  Poll 
taxes,  or  capitation  taxes,  were  frequent,  and  as  these  often 
demanded  an  equal  sum  from  every  one.  they  were  specially 
oppressive.  The  insurrection  of  Wat  Tyler  in  the  reign  of 
Richard  II.  was  occasioned  by  a  poll  tax.'  These  taxes  have 
been  generally  abolished  in  Europe  and  America.  The 
constitutions  of  Manlaod  and  Ohio  especially  prohiUt  poU 


pKcedeil  bf  an  anenpt  lo  lax  all  in 
bat  tbe  icsisIaDcc  of  the  powetfal  was  k)  obstiiMte  I 
See  WkoaS  -  Nuioul  Badpt,'  etc.  Oupti 


>>bititT. 


ORIGIN  AXD  GROWTH  OF  MODERN  TAXATION-   43 

taxes,  but  they  still  linger  in  some  of  our  states  as  a  relic  of 
barbarisiil.' 

The  hearth  and  window  taxes  were  especially  oppressive. 
'ITie  window  taxes  increased  with  the  number  of  windows,  aod 
thus  people  were  induced  to  deprive  themselves  of  the  light. 

The  workings  of  this  tax  are  well  illustrated  by  a  passage 
in  Fielding's  "  Tom  Jones."  A  landlady  is  represented  as 
saying  to  an  officer  of  the  army  :  "  To  be  sure  it  is  natural  for 
us  to  wish  our  enemies  dead,  that  the  wars  may  be  at  an  end 
and  our  taxes  lower ;  for  it  is  a  dreadful  thing  to  pay  as  we 
do.  Why,  now  there  is  above  forty  shillings  for  window  lights, 
and  yet  we  have  slopped  up  all  we  could ;  we  have  almost 
blinded  the  house,  I  am  sure.'" 

A  curious  illustration  of  Adam  Smith's  assertion  that  those 
paid  taxes  who  were  too  weak  to  resist,  is  found  in  Mr.  James 
Russell  Lowell's  "Address  on  Democracy."  The  author  is 
speaking  of  the  Provinces  of  Lower  Austria  in  1546,  in 
which  there  were  live  sorts  of  persons,  —  clergy,  barons, 
nobles,  burghere,  and  peasants,  —  and  he  quotes  from  Ber- 
nardo Navagero,  to  the  effect  that  no  account  was  made  of 
the  peasants  because  they  "  had  no  voice  in  the  diet."  "  Be- 
low the  peasants,"  continues  Mr.  Lowell,  "it  should  be 
remembered,  was  still  another  even  more  helpless  class  —  the 
servile  farm  laborers.  Tlie  same  witness  informs  us  that  of 
the  extraordinary  imposts,  the  peasants  paid  nearly  twice  as 
much  in  proportion  to  their  estimated  property  as  the  barons, 

*  "That  the  levying  of  laxe»  by  ihc  poll  is  grievous  and  oppteisive, 
tsA  ought  lo  be  prohibited ;  Ihat  paupen  ought  not  be  assessed  for  the 
■uppott  of  the  gDvernment."  —  Cunsritution  of  Maryland,  Declaration 
of  Kigbta,  Article  XV.  This  provision  in  regard  to  poll  loxea  has  been 
incorpurated  into  the  Ohio  constitution. 

'"Tom  Jones  "appeared  in  1750.  It  was  not  until  1851  thai  this 
tax  wu  abolished. 


44  INTRODUCTION. 

nobles,  and  burghers  together.  Moreover,  the  upper  classes 
were  assessed  at  their  own  valuation,  while  they  arbiirarily 
fixed  that  of  the  peasants,  who  had  no  voice." ' 


THE  EARLY   AMERICAN   VIEWS  OF  TAXATION. 

The  right  of  taxation  has  not  always  been  recognuied  even 
in  America,  new  as  is  our  history.  In  the  report  of  Mr. 
Wolcott,  Secretary  of  the  Treasury,  made  to  Congress  in 
1796,  on  the  systems  of  taxation  in  the  various  states,  it  was 
stated  that  no  direct  tax  had  been  levied  in  New  York  since 
1788,  and  that  no  objects  of  taxation  were  defined  by  the  laws 
nor  any  principles  of  valuation  prescribed.  The  credit  and 
funds  of  the  state  were  ample,  and  their  product  sufficient 
to  supersede  the  necessity  of  taxation  except  for  county  and 
local  purposes.  The  tax  of  1788  amounted  to  {60,000. 
The  annual  civil  expenses  of  the  state  were  $75,900  in  1756, 
in  addition  to  which  there  were  grants  to  universities,  col- 
leges, schools,  hospitals,  and  some  "  contingent "  exijenses.* 

In  Rhode  Island  there  was  an  attempt  to  conduct  the 
government  by  all  sorts  of  makeshifts,  without  regular  taxa- 
tion, for  some  time  after  the  foundation  of  the  colony,"  Phil- 
adelphia was  greatly  embarrassed  on  account  of  the  absence 
of  the  power  to  lay  taxes,  even  in  the  eighteenth  century  ■ 
and  it  was  resolved  in  1710  "to  make  application  to  the 
assembly  for  the  passage  of  an  act  empowering  the  corpora- 
tion to  make  ordinances  and  by-laws  for  the  better  support, 
rule,  and  government    of  this  city,"     It  appears   that  no 

'  "  Democrncy,  and  Other  Addresses,"  hy  James  Russell  Lowell,  B,«. 
ton,  1SS7,  page  iz. 

"  Amcticin  Stale  Pipers,  Finance,  Volume  I. 

'  Aulhority  is  Mr.  H.  B,  Gordnet's  paper,  to  whith  reference  has  aJ 
leady  been  made. 


ORIGIN  AND  GROWTH  OF  MODERN  TAXATION.   M 

power  of  taxation  whatever  existed  under  the  charter  of 
1701  ;  and  "by  the  common  law  the  power  of  taxation  of 
the  borough,  if  it  can  be  said  to  have  existed  at  all,  was 
of  the  most  restricted  character ;  nor  could  the  king  or 
proprietor  grant  such  a  power,  .  . ,  The  main  sources  of 
revenue  were  from  fines,  fees,  freedoms,  city  property,  and 
lotteries." '  Fines  were  heavy  and  oppressive  on  account 
of  the  necessities  of  the  city,  while  wharves,  market -stalls, 
and  other  city  property  yielded  an  income  increasing  with 
the  growth  of  the  city.  The  control  of  taxation  by  the  people 
was  established  by  an  act  of  1711. 

The  state  of  Pennsylvania  levied  the  first  direct  state  tax 
in  1785.  *lt  was  an  annual  tax  of  £,i(>,^i,i,  and  was  levied 
until  1789,  when  it  was  discontinued.  How  poorly  it 
was  collected  may  be  seen  in  the  fact  that  the  arrearages 
i*}  '795  amounted  to  S14.560.  The  annual  expenditure 
of  the  state  government  was  given  as  ?  130,000  in  the  re-  ' 
port  of  Mr.  Wolcott  on  the  various  systems  of  state  taxa- 
tion.' The  revenue  of  the  state  then  exceeded  this  amount, 
and  it  was  stated  as  probable  that  ihe  state  would  con- 
tinue to  be  exempt  from  the  necessity  of  taxation  except 
for  county  purposes.  Pennsylvania  hoped  to  abolish  tax- 
ation in  the  present  century,  during  the  early  part  of  which 
a  comparatively  small  proportion  of  the  revenues  was  raised 
by  taxation.  "  In  1810  the  revenues  of  the  state  amoimted 
to  ^353,965-08.  Of  this  sum  the  interest  on  state  invest- 
ments returned  8134,887.95 ;  lands,  593,644.42 ;  taxes, 
1(83,658,25.  The  expenditure  per  capita  was  seventy- 
three  cents,  and  taxes  per  capita  were  thirteen  cents.  .  .  . 

'  See  Philadelphia,  by  Mlinaon  and  Penrose,  Baltimore  and   Phib- 
delphia,  1887,  pages  22-29, 

American  Stale  Papcti.  Finance.  Volume  I.    The  date  of  the  repuil 
U.796- 


^H  *  Am 


46  INTRODUCTION. 

Before  the  year  1825,  with  the  enception  of  the  tax  on 
bank  dividends,  there  was,  with  one  minor  exception,  no 
state  taxation  whatever  except  in  llie  way  of  Lcense.  In  1817 
the  House  Committee  of  Ways  and  Means  reported  that 
there  had  been  a  steady  ini:rease  in  the  various  permanent 
sources  of  revenue ;  that  they  would  suffice  for  the  general 
expenses  of  government,  and  that  the  suriilus  in  a  few  years 
would  redeem  the  public  debt."  ' 

The  financial  history  of  Pennsylvania  illustrates  the  ex- 
treme difficulty  with  which  taxes  can  be  established  among 
people  who  have  either  never  been  used  to  them,  or  wha 
have  grown  unaccustomed  to  them.  The  people  refused  to 
submit  to  any  taxation  whatever,  and  the  burdens  resting  on 
the  public  works  increased  constantly,  while  no  appeals  could 
move  them  to  raise  any  money  for  the  support  and  mainte- 
nance of  iheir  own  property ;  as  foolish  a  proceeding  as 
for  the  stockholdere  of  a  railway  corporation  to  refuse  to 
levy  an  assessment  on  stock  for  any  purpose.  The  unwill- 
ingness to  submit  to  taxation  led  to  the  sale  of  the  public 
works  of  Pennsylvania,  canals  included,  and  thus  the  slate 
suffered  loss. 

The  financial  history  of  Maryland  illustrates  the  same  fact 
There  were  few  Instances  of  state  taxes  before  1841,  duric^ 
the  present  century,  and  by  that  time  people  had  learned  to 
look  upon  taxes  with  great  aversion.  The  state  had  reck- 
lessly lent  its  credit  to  aid  in  the  construction  of  works  of 
internal  improvement,  and  it  became  embarrassed  by  their 
failure  to  meet  expectations.  So  obstinate  was  the  resist- 
ance to  any  taxalion  whatever,  that  repudiation  was  openly 
advocated  as  preferable  to   taxation.     Better  advice  pre- 


I 


•  Worlhington, "  Historical  Sketch  of  the  Finnnces  of  Pcnnsj'lvaDia." 
Ameiican  Ecuuomic  Asaocialiuo  monogisph,  May,  1SH7. 


omcm  AND  GROWTH  OF  MODERN  TAXATION.     47 

vailed,  and  the  present  methods  of  taxation  in  Maryland 
were  instituted  in  1841. 

Jl  is  important  for  us  to  remember,  especially  at  the 
present  time,  how  difficult  it  is  to  re-establish  taxation  when 
the  right  to  tax  has  been  allowed  to  fall  into  disuse. 


While  taxes  have  increased  enormously  during  the  present 
century,'  a  large  proportion  of  the  revenues  of  modem  states 
s  still  derived  from  other  sources  than  taxation.  The  pub- 
lished budgets  of  states  and  cities  are  so  imperfect,  even  in 
Europe,  tha[  it  is  difficult  to  give  full  and  complete  informa' 
tion  on  the  point ;  and  in  America  the  information  which 
can  be  gathered  is  sttll  more  fragmentary.'  It  is  to  be 
noticed  in  this  connection  that  the  more  modem  budgets 
show  a  tendency  to  assume  the  character  of  the  older  budgets 

ome  respects.  Taxes  occupy  a  place  of  relatively  decreas- 
ing importance  in  the  budgets  of  many  states  and  cities. 
This  is  due  to  the  ac(|i]isition  of  public  works,  like  railroads, 
telephones,  and  telegraphs,  to  the  extension  of  forest-cul- 
ture by  the  states,  and  to  the  extension  of  municipal  func- 
tions by  the  purchase  or  construction,  of  street-car  lines  in  a 
few  instances,  of  water-works,  gas-works,  and  electric-light- 
ing works  more  frequently.  This  explains  the  more  cheer- 
ful tone  which  may  be    observed  of  lale  in  the    English 

nicipalities.  The  rapid  increase  in  local  debts  in  Eng- 
land excited  a  good  deal  of  alarm  for  a  time,  but  it  is  now 

'  Facli  in  regard  to  this  will  be  foniid  in  inolher  part  of  the  pteient 

*  With  Ihe  resource*  of  the  Uniled  Ststcs  at  his  command,  a  cen- 
is  official  might  galhec  enough  facu  to  make  some  estimalea,  bul  [hete 
would  be  more  or  leu  uncertain. 


48  INTRODUCTION. 

found  that  many  of  these  cities  have  valuable  assets  to  show 
for  expenditures.  It  is  possible  to  sec  ouly  the  beginniugs 
of  such  a  moveincnl  in  the  United  States.  New  York  slate 
has  entered  upon  forest -culture,  and  it  is  now  proposed  that 
the  United  States  should  do  the  same.' 

Water-works  are  generally  owned  by  our  municipalities, 
and  gas-works  rarely.  Wheeling,  West  Virginia,  acquired 
private  gas-works  by  purchase  in  1871,  and  the  controversy 
about  the  Philadelphia  gas-works  in  1886  has  been  decided 
in  favor  of  municipal  ownership,  in  spite  of  powerful  pressure 
iDy  a  syndicate  of  prominent  men.  It  may  safely  be  said  that 
the  sentiment  in  favor  of  municipal  enterprises  in  the  matter 
of  gas-supply  is  a  growing  one,  and  it  seems  probable  that 
popular  pressure  for  federal  ownership  and  control  of  the 
telegraph  is  becoming  more  intense. 

The  only  public  street-car  line  in  the  United  States  is  that 
which  runs  over  the  New  York  ajid  Brooklyn  Bridge,  but 
American  municipalities  exhibit  an  increasing  inclination  to 
derive  a  revenue  from  street-cars.  A  considerable  percent- 
age of  the  revenues  of  lialtimore  is  derived  from  the  specid 
tax  of  nine  per  cent,  on  the  gross  revenues  of  all  streel-car 
lines,  and  the  regular  taxes  which  they  pay  in  addition,  like  > 
all  other  corporations.  A  recent  New  York  stale  law  com- 
pels all  cities  in  that  commonwealth  to  sell  franchises  for 
street-cars  at  public  auction  for  a  percent^e  of  gross  reve- 
nues. The  present  mayor  of  New  York  City,  Hon,  A.  S. 
Hewitt,  advocates  the  construction  and  ownership  of  a  rapid 

'  .\  W11  hga  been  introduced  into  the  Congress  of  (he  United  .Slatci, 
entitled  "  A  Bill  for  Ihe  IVulectiun  nnd  Ailministratjun  of  Foresls  on  the 
Public  Domain."  Il  is  inJivrsed  by  the  American  Forestiy  Congresi, 
■nd  may  be  »aid  to  meet  wilh  popular  approval.  The  only  qaestion  is 
whether  Ihe  laud  and  lumber  tliievei  will  be  powerful  CDODgh  to 
defeat  iU 


lUJ     CDODga    ID  ^^^_ 


ORIGIN  AND  GROWTH  OF  MODERN  TAXATION.     49 

transit  system  in  that  city  by  the  municipdity,  and  a  bill  has 
been  introduced  into  the  New  York  legislature  to  authorize  a 
municipal  rapid  transit  system  in  cities  having  over  800,000 
inhabitants.  American  states  draw  an  increasingly  large 
proportion  of  their  revenues,  in  similar  manner,  from  rail- 
roads oi)erated  by  steam,  several  states  defraying  all  or  nearly 
all  of  their  expenses  from  these  revenues.  A  determination 
to  draw  more  than  formerly  from  tlie  revenues  of  telegraph, 
telephone,  express  and  street-car  companies  is  already  mani- 
fest. It  may  be  said  that  we  can  discern  a  tendency  in  taxes 
to  occupy  a  place  of  relatively  decreasing  importance  even 
in  American  budgets. 

The  following  table  gives  the  net  revenues  of  certain 
European  states  from  domains  and  forests,  during  the  fiscal 
year  1880-81  ;  — 


Prunia 45,6i2,ocxi  mu-ki* 

B>vuia 19,615,000  " 

Kingdam  of  Swony 7,ao;,ooo  " 

WBrtemberg i>339-ooa  " 

B«den 3.537.000  " 

Anslria 1,740,000  " 

Hungur 11^97.000  " 

France 35,9rz.ooo  " 

luly 1,247,000  " 

Great  Britain 6,700,000  " 

The  following  table  gives,  in  columns  one  and  two,  per- 
centages of  revenues  derived  by  certain  states  from  profits 

*  Tbis   table  is   taken   from    Roschei'i    "  Fiiuuuwissenscheft,"  2d 
edition,  pigc  34. 

*  A  mark  equals  33.8  «nl».    For  toogh  cftlcalaiions  four  marks  are 
udbUjT  CDiuideied  as  equal  to  one  dollar. 


so  INTRODUCTION. 

on  domains  and  forests  in  1873  and  1880  respectively,  and 
in  columns  three  and  four  gives  the  percentages  of  revenues 
derived  from  profits  on  all  gainful  pursuits  of  the  states,  or 
the  "  entire  private  acquisition,"  '  as  it  is  called,  in  the  years 
1873  and  1884-85  respectively.  The  profits  are  calculated 
by  subtracting  all  expenses  from  gross  receipts.  The  per- 
centages for  the  year  1S84-85  are  given  for  only  a  few  Ger- 
man states. 


m»>.«T.. 

laia 

18TB 

1873 

18S4-S 

Saxony  

97 

8.9 

S4-7 

72.70 

WQtlembeiB 

13-a 

9-9 

4Z.9 

379a 

Bavaria  .    . 

'7-3 

'5-9 

370 

56,71 

B.den    .    . 

7' 

3.9 

36.6 

58.49 

Pruuia  .    . 

8.4 

7-5 

31-9 

66.29 

Denmaik    . 

1.9 

4.6 

36.0 

Swiuetland 

4.1 

a44 

Belgium      . 

1.0 

0.9 

18.6 

Nelherlaadi 

1.9 

'3 

17.0 

Norway .     . 

1,1 

0.7 

13.05 

3-6 

34 

IJ.7 

Russia    .     . 

34 

0.4 

u.S 

IWly.    .    . 

3-0 

I.O 

10.2 

Chili.     .    . 

'■7 

2-3 

8.3 

Servia    .    . 

1.8 

6.6 

Auitria  .    . 

0,5 

O.Z 

4-9 

Pottogal     . 

0.6 

0.2 

4-7 

France   .    . 

1-4 

1-9 

l-^ 

Ureal  Drilnin 

0.6 

»s 

German  Empire 

"7-6S 

AUnce-Larraine 

15.11 

'  Dtr  gantt  Privatirvorrb. 

*  Colraniu  one  and  three  are  taken  bom  Wa^et'* 
tchaft,"  Part  I.,  2d  cdilioD,  page  356.     Colanm   twc 


ORrcm  AND  GROWTH  OF  MODERN  TAXATION.    51 

It  is  worthy  of  notice  that  the  net  profits  on  German 
state  railways  more  than  pay  tlie  interest  on  all  the  debt  of  \ 
the  German  state.     The   following  table  is  given   by  von 
Scheel,'    The  money  is  in  marks. 


»<»su. 

.*«««. 

S^NV. 

WD-IMrtC 

»u>».. 

Interest   on 

debt  .    . 

I3S.358/XX) 

47,643,000 

32|62Z,00C 

17.s03.000 

i3,6o6/x» 

Net  revenues 

of  stale  mil- 

tOKll.       . 

164,6851000 

37.3'7.o«' 

37,158.000 

11,848,000 

li.iSi.ooo 

It  is  worth  while  to  record  the  opinion  of  von  Scheel  in 
regard  to  state-owned  and  state-operated  railroads,  as  indic- 
ative of  the  drift  of  opinion  in  Germany.  It  was  a  matter 
of  grave  doubt  in  1877  whether  Prussia  was  doing  well  to 
acquire  private  railroads.  Professor  von  Scheel  says  in  hts 
monograph,  published  in  1885,  that  all  opportunity  for 
s  controversy  as  to  the  desirability  of  stale-owned  and 
state-operated  railroads  has  now  been  removed  by  the  test  of 
actual  experience  which  has  decided  in  favor  of  the  state  in 
European  countries* 

Municipal  statistics,  even  in  Europe,  are  so  imperfect  that 
it  is  possible  to  give  only  isolated  facts  about  the  revenues 
which  cities  derive  from  property  and  productive  enterprises. 
It  can  be  safely  said  that  these  are  increasing,  for  nearly  all 
the  facts  which  can  be  gathered  show  a  movement  towards 

■he  Hofkalender  for  iSSo,  published  by  Justus  Perthes.  The  per- 
centages ate  probably  derived  in  most  cases  from  budgets  of  1879, 
Qilumn  four  is  derived  from  the  monugraph  on  "  Erwerliu^inkiinfte  des 
SHBti."  by  voti  Scheel  in  the  Jii  edition  of  Schdnberg's  "Handbuch  det 
Palitischen  Oekonomie,"  Vulume  til.,  page  6S. 

'  I.e.,  page  97.  *  I.e.,  page  83. 


a  INTRODUCTION. 

increased  receipts  in  the  modem  city  from  other  sources 
than  taxation. 

Paris  derives  considerably  over  twenty  per  cent,  of  its  reve- 
nues from  productive  property.  Some  of  this  is  managed 
directly,  but  the  larger  proportion  by  companies  with  limited 
chartere  granted  under  condition  that  all  the  property  should 
revert  to  the  city  without  compensation  on  the  expiration  of 
the  charter  period.  In  the  meanwhile,  these  companies 
divide  profits  with  the  city  of  Paris.  Leroy-ISeaulieu  thinks 
that  the  revenues  from  public  property  and  municipal  enter- 
prises will  defray  the  greater  proportioo  of  the  expenses  of 
Paris  before  1950,  and  that  thereafter  only  a  small  direct 
tax  will  be  needed,  The  expenditures  of  the  city  of  Paris 
were  about  146  millions  of  francs  in  18S2,  and  of  this,  prop- 
erty and  productive  enterprise  yielded  about  52  millions  of 
francs.  The  gas  company,  whose  charter  expires  in  1905, 
paid  about  15  millions  of  this  sum.'  The  payments  by  the 
company  have  increased,  and  in  1S85  they  amounted  to 
17,499,156  francs.' 

Rent  of  halls  and  markets  yields  over  7  millions  of  francs, 
and  the  abattoirs  bring  in  an  annual  return  of  over  3J  mil- 
lions ;  waler-works  about  1 1  \  millions  \  public  conveyances 
over  5  millions,* 

The  budget  of  Leipsic,  Germany,  in  18S6,  shows  receipts 
from  taxes  amounting  to  4,118.007  marks,  while  rents  and 
proiits  on  property  yielded  the  following  sums  :  — 

1  "Traile  de  U  Science  dt-s  Finances,"  by  I.eroy-Beaulieu,  Jd 
ediiion.  Volume  II,  p»ge  109. 

»  The  price  of  gns  U  high ;  Im5  '»"■  ihe  >oa>  cubic  feel,  or  a  liKle 
aver  27  centimes  for  the  cubic  metre,  llie  gits  company  pays  aoo,ooo 
francs  for  ihe  lue  aC  Ibe  public  subways. 

*  See  the  excellent  siatisiical  worlu,  "Annoairc  Statistiqae  de  la 
Villede  Paris."     VI«    Annee  — 1SS5.     Paris,  18S7. 


ORIGIN  AND  GROWTH  OF  MODERN  TAXATION.    S3 

Net  pcotiU  on  landed  estates 156,581  marks. 

F.>r«u 58^51     ■• 

Mills,  elG 6,005     " 

Meadow*,  etc 35.668     " 

Chase  an<l  lisheriea 3-1^7     " 

Slone  quany ".949      " 

R="i* 55.967    " 

Tulill 327.349     " 

to  which  must  be  added  estimalej  profits  from  the  gas- 
works, 1,037,443  marks,  which,  with  some  other  receipts, 
brings  the  revenues  from  other  sources  than  taxation  up  to 
over  one  (]uarter  of  all  revenues. 

Nuremberg  received,  in  1883,  from  city  property  151,740 
marks,  and  from  taxes  1.600,353  marks. 

In  Berlin  73.39  per  cent,  of  expenses  is  paid  from  lax 
receipts,  while  the  gas-works  yield  about  15  per  cent.' 

The  increase  of  municipal  revenues  from  other  sources 
than  taxation  is  seen  in  the  statement  that  the  gross  re- 
ceipts from  property  and  gainful  pursuits  in  forty  I'russian 
cities,  with  over  10,000  inhabitants  each,  rose  from  340 
pfennige  to  1014  pfennige  per  capita  between  1869  and 
1876,  and  the  net  receipts  during  ihe  same  period  from 
34  lo  434  pfennige  per  capita.*  In  Prussia  all  the  water- 
works have  finally  become  public  works,  and  the  public  gas- 
works produce  over  twice  as  much  as  the  private  gas-works, 
and  these  arc  gradually  passing  into  municipal  ownership 
like  the  water-works. 

In  England  cities  have  recently  begun  lo  acquire  gas- 

1  K  btcr  eslimatc  which  I  have  seen  makes  the  receipts  from  gas- 
wuiks  cover  18  per  cent,  or  all  ihe  expenses  of  Beclin.  Gas  is  solJ  foe 
less  ihan  $1  .oo  a  ihuus-ind. 

*  A  pfennig  is  nl>out  onc-fourih  of  a  eeni.  These  slalistlcs  ore  taken 
fruni  Roschei's"linaniwisscQSehnfl,"  §  158, 


54 


INTRODUCTION, 


works  and  street-car  lines.  In  the  financial  year  1883-84 
the  amount  of  money  received  from  water-works  by  munici- 
pal boroughs  was  ;;^i,928,585  ;  by  urban  sanitary  districts, 
;;^267,8io ;  by  rural  sanitary  districts,  ^^19,166.  From  gas- 
works the  municipal  boroughs  received  ^^3,056,559 ;  the 
urban  sanitary  districts  received  ^^307,489.  From  tram- 
ways the  municipal  boroughs  received  ;^8 1,980.^ 

Such  data  as  can  be  obtained  in  regard  to  revenues  de- 
rived by  American  states  and  cities  from  gainful  pursuits 
will  be  given  in  a  subsequent  part  of  this  work. 

*  From  Professor  Frank  J.  Goodnow's  paper  on  "  Powers  of  Munici- 
palities Respecting  Public  Works."  Monograph  of  American  Economic 
Association,  Volume  II.,  No.  6. 


CHAPTER    IV. 


A    FEW   GENERAL   REMARKS    ON    THE   WORKINGS 
OF   TAXATION. 


I 


TAXATION  seems  like  a  simple  ihing  to  one  who  has 
never  reflected  on  its  nature  and  consequences. 
When,  however,  one  begins  seriously  lo  examine  the  finan- 
cial systems  of  different  ages  and  of  different  countries,  one 
must  be  profoundly  impressed  with  the  far-reaching  impor- 
tance of  taxation.  Taxation  may  create  monopolies  or  it 
may  prevent  them  ;  it  may  diffuse  wealth  or  it  may  concen- 
trate it ;  it  may  promote  liberty  and  equality  of  rights,  or  it 
may  tend  to  the  establishment  of  tyranny  and  despotism ; 
it  may  be  used  to  bring  about  reforms,  or  it  may  be  so  laid 
as  to  aggravate  existing  grievances  and  foster  dissension  and 
hatred  between  cbsses ;  taxation  may  be  so  contrived  by  the 
skilful  hand  as  to  give  free  scope  to  every  opportunity  for 
the  creation  of  wealth  or  for  the  advancement  of  all  true 
interests  of  states  and  cities,  or  it  may  be  so  shaped  by  igno- 
ramuses as  to  place  a  dead  weight  on  a  community  in  the 
race  for  industrial  supremacy.' 

There  are  those  who  claim  that  when  the  state  lakes  ten 
dollars  from  me,  I  am  simply  ten  dollars  poorer,  and  that 


ftom  one  of  my  ati 
during  the  past  win  I 


iBt  »aine  of  these  obscrvatians  are  quoted 
1  "  Problems  of  To-day  "  which   appeared    ■ 
e  Bollimurc  Sun. 


56 


INTRODUCTION. 


nothing  fttrlher  needs  to  be  said  on  the  subject.  Nothing 
could  be  more  erroneous.  It  makes  a  vast  difference  to  me 
on  what  the  tajc  is  laid,  when  the  tax  is  collected,  and  what 
is  done  with  ii.  There  are  those  who  look  upon  taxation  as 
so  simple  a  thing  that  they  feel  warranted  in  laying  dowa 
this  general  proposition  i  When  money  in  taxes  Is  taken 
from  some  of  us  to  spend  for  other  members  of  the  com- 
munity, we  who  pay  are  impoverished,  or,  if  the  reader  will, 
even  robbed  for  the  benefit  of  those  who  receive  it.  This 
is  far  from  going  to  the  bottom  of  things.  Considerations 
adduced  in  a  previous  chapter  show  its  fallacy.  One  illus- 
tration will  show  us  further  grounds  for  the  view  that  taxa- 
tion requires  careful  study  at  this  time  from  all  citizens.  I 
wiU  give  my  experience  in  regard  to  taxes  for  educational 
purposes  because  it  is  merely  a  typical  instance.'  1  was 
educated  largely  at  public  schools,  and  it  is  doubtful  whether 
I  should  have  been  able  to  finish  my  school  education  had 
not  (he  schools  which  I  attended  been  supported  by  taxes ; 
for  where  schools  are  supported  by  fees,  these  fees  must  be 
high  in  order  to  defray  expenses  if  the  schools  are  of  supe- 
rior quality.' 

My  educational  advantages  have  been  of  pecuniary  advan- 
tage to  me,  while  the  personal  satisfaction  which  I  derive 
from  them  is  to  me  beyond  price.  I  have  become  a  tax- 
payer, and  with  no  children  of  my  own  at  public  schools,  I 
am  helping  to  educate  other  men's  children.     If  in  the 

'  The  reader  will,  I  am  aute,  pardon 
given  becauisc  concrete  illustralions  are 
abstract  reasoning. 

'  Few  undersland  how  eifpcnsive  educntion  is  in  modem  timet. 
Tbe  tuition  fees  of  the  Johns  Hopkina  Univenily  students  have  not 
covered  one-tenth  of  llie  expenses.    The  tuition  fee  was  »l  first  fSo 


GENERAL   REMARKS   ON   TAXATION.  57 

rourse  of  my  life  I  pay  in  taxes  for  schools  twenty  times 
what  1  have  evtr  received  from  taxes  levied  for  my  educa- 
liun,  I  shall,  nevertheless,  think  I  have  been  well  repaid,  and 
shall  always  experience  a  feeling  of  profound  gratitude  for 
those  who  established  the  American  public  school  system. 
While  I  individually  gain,  the  community  also  gains,  because 
it  receives  back  more  than  it  has  paid  out.  This  holds 
generally  with  regard  to  wise  expenditures  for  educational 
purposes.  The  chief  factor  in  production  is  man,  and  the 
better  he  is  prepared  for  industrial  pursuits  by  suitable  train- 
ing of  hand  and  head,  the  larger  will  be  the  quantity  of 
economic  goods  produced,  and  the  more  rapid  the  accumu- 
lation of  wealth.  A  present  burden  may  lessen  future  rates 
of  taxation  by  increasing  the  taxable  basis  of  a  state  or 
city.' 

THE  TENDENCIES   OF  TAXAT10^f  ARE  VARIOUS. 

Taxation  is  apt  to  lead  to  interference  in  the  business 
aflairs  of  private  individuals,  and  such  interference  ttnds  to 
foster  monopoly.  Taxes  laid  for  educational  purposes  tend 
to  prevent  monopoly,  because  education  renders  the  ordi- 

'  No  l«  should  be  levied  unleaa  the  money  raised  tbeceby  can  he 
emplojcil  beUcr  by  guverntnent  ihan  by  iniliviiluals.  This  sell  ihc 
Iroe  limit  lo  laxes.  This  itiea  is  well  exprcsseii  in  the  conslituliun  uf 
Pentuylvania  of  the  year  177G. 

"Sec.  41.  No  public  tax,  cuslum  or  contrDiution  shall  be  imposed 
upon,  M  paid  by,  Ihe  people  of  this  slnlc,  except  by  n  law  fur  thai 
piUpoM;  And  before  any  law  be  made  for  raising  il,  the  pucpuse  for 
which  any  lax  ii  lo  be  rnised  ought  t'l  A)>pcar  ck-acly  to  the  legislature 
to  be  of  more  icrvicc  lo  the  eommunily  ihan  the  money  would  be,  if 
not  collected;  which  being  welt  observed,  taxes  cnn  never  be  batlhens." 

The  Vermont  constitution  of  1777  his  this  same  provision,  probably 
copied  from  Ihe  Pennsylvn 


mTRODOCTlON. 


aary  man  better  able  to  potect  his  own  interests,  both  as  an 
individual  and  as  a  member  of  society. 


TAXATION  AXD   UBEBTV. 

Is  it  a  good  thing  to  be  taxed  ?  One  replies,  □ 
tivety.  Taxation  in  the  pnpular  mind  is  coupled  with  eviL 
It  is  said  that  only  two  things  are  certain,  and  those  are 
"  death  and  the  taxes,"  Taxes  no  doubt  are  often  a  serious 
burden,  and  are  frequently  more  disastrous  in  their  indirect 
than  in  their  direct  effects.  The  preceding  paragraph  has 
shown  that,  considered  from  the  standpoint  of  benefits 
conferred  by  the  govemmeni.  taxes  are  often  benetictal. 
The  benefits  derived  from  taxes  can  also  be  seen  in 
their  connection  with  the  liberty  which  we  enjoy  in  mod- 
em times.  When  free  political  institutions  would  have 
come  to  the  countries  of  Europe  without  taxes,  is  un- 
certain, but  it  is  clear  that  they  came  largely  through  the 
avenue  which  the  taxing  power  opened.  Sovereigns  found 
their  ancient  sources  of  revenue  insufficient  and  were 
obUged  to  petition  for  subsidies  which  were  granted  under 
conditions.  Again  and  again  the  sovereign  found  it  neces- 
sary to  petition  for  new  revenues,  and  the  estates  of  the 
realm  continually  increased  their  demands  for  concessions, 
until  finally  in  England  the  lower  House,  through  the  con- 
trol over  the  purse  strings  of  the  nation,  has  become  more 
powerful  than  the  Queen  and  the  Lords.  This  is  one  of  the 
most  important  keys  to  the  comprehension  of  modem  his- 
tory. English  constitutionalism  has  been  built  up  on  the 
taxing  power  from  Magna  Charta  in  1215  until  the  present 
day.  King  John  was  allowed  to  reserve  for  iiimself  the  three 
customary  feudal  '■  aids  "  :  namely,  contributions  in  case  of 
king's  captivity,  on  the  knighthood  of  his  eldest  son,  and  on 


GENERAL   REMARKS   ON   TAXATION. 

the  marriage  of  his  eldest  daughter;  but,  otherwise,  the 
charter  reads,  "  no  scutage '  or  aid  shall  be  imposed  in 
our  realm  save  by  the  common  council  of  our  realm." 
Green  says  justly  in  his  "Short  History  of  the  English  Peo- 
ple "  that  the  English  constitutional  system  rests  on  this  pro- 
vision. The  great  Council  of  the  Barons  became  the  Parlia- 
ment of  our  day  when  the  financial  needs  of  the  sovereign 
compelled  him  to  give  assent  to  the  addendum  to  the  Great 
Charter  in  iz94,  called  the  statute  de  tallagio  ncn  co 
dendo,  whereby  it  was  agreed  that  no  taxes  should  be  levied 
by  the  king  save  with  the  consent  of  knights,  burgesses, 
citizens  in  Parliament  assembled.  Green  says,  "By  a  change 
.  . .  within  the  Parliament  itself  we  shall  soon  see  the  bur- 
gess, originally  summoned  only  to  take  part  in  matter 
taxation,  admitted  to  a  full  share  in  the  deliberations  and 
authority  of  the  other  order  of  the  state.  The  admission  of 
the  burgesses  and  knights  of  the  shire  to  the  assembly  c 
IJ95  completed  the  fabric  of  our  representative  constitution." 
Parliamentary  institutions  were  strengthened  by  the  Petition 
of  Right  of  i6i8,  and  the  Declaration  of  Rights  of  1689. 
The  House  which  drew  up  the  Petition  of  Right  was  s 
moned  by  Charles  I.  when  overwhelmed  "with  debt  and 
shame,"  and  was  under  the  control  of  those  who  had  suffered 
by  resistance  to  arbitrary  taxation.  The  Petition  quoted 
the  statutes  against  arbitrary  taxation,  loans,  and  benevo- 
lence, and  in  it  the  Commons  prayed  the  king  that  '■ 
man  be  compelled  to  make  or  yield  any  gift,  loan,  bene 
lence,  tax,  or  such  like  charge  without  common  assent  by 
act  of  Parliament."  The  Declaration  of  Rights  contained 
this  statement ;  "  Levying  money  for  or  to  the  use  of  the 
crown  by  pretence  of  prerogative,  without  grant  of  Parlia- 

1    money  Toi   persoDil   lervices 


60  INTRODUCTION. 

menC,  for  longer  time  or  in  other  manner  than  the  same  is 
or  shall  be  granted,  is  illegal."  The  Declaiation  of  Rights 
was  followed  up  l>y  annual  j,Tanls  of  siijijilies  —  instead  of  life 
grants,  as  during  the  ri'igns  of  Charles  II,  and  James  11. — 
and  annual  renewals  of  the  Mutiny  Act,  containing  provis- 
ions for  the  discipline  and  pay  of  the  army.  An  annual 
Parliament  has  since  that  time  been  a  necessity,  in  order  to 
provide  supplies  for  the  state,  and  to  grant  disciplinary 
powers  for  the  maintenance  of  the  army.  Green  speaks  of 
this  as  "  the  greatest  constitutional  change  which  our  history 
has  witnessed." '  It  is  the  control  of  the  commons  over 
the  revenues  of  the  realm  which  now  etubles  the  lower 
Hotise  of  Parliament  to  bring  the  upper  House  to  terms, 
and  even  to  threaten  the  abolition  of  the  Lords. 

Space  is  too  short  lo  enable  me  to  enter  upon  historical 
accounts  of  the  connection  between  linance  and  liberty  else- 
where, and  it  would  take  the  reader  too  far  from  the  imme- 
diate purpose  of  the  present  work.  Any  careful  perusal  of 
modem  history  will  disclose  the  main  facts  with  sufHicieot 
clearness.  What  has  already  been  said  will  show  that  no 
political  tendency  is  either  wholly  good  or  wholly  bad. 
Strong  kings  sacrificed  the  public  domains,  and  unscrupulous 
ones  parted  with  public  rights,  rather  than  petition  the  peo- 
ple for  aids  and  subsidies. 

To-day  the  careftil  observer  of  contemporary  politics  must 
feel  that,  were  taxes  on  the  continent  of  Europe  no  longer 
necessary,  the  painfully  acqtiired  liberties  of  the  people 
would  be  in  serious  peril.  There  appears  to  be.  however, 
no  ground  for  apprehension  in  the  recent  increase  in  rev- 
enues derived  from  other  sources  than  taxation,  for  taxes 

•  Sec  Gieen's  "  Short  History  of  Ihe  English  Peoiilc,"  Chapters  IV. 
and  IX.-,  Ro»cher'»  "  Fin»niwi55cnschaft,"  Book  II,  Chapter  III., 
\  S3l  WilMQ's  "Nalional  Budgei,"  etc.,  Chapier  1. 


GENERAL  REMARKS   ON   TAXATION.  61 

roust  still  yield  —  and  so  far  as  we  can  see  will  continue  to 
yield  in  the  future  —  an  immense  sura,  and  the  inevitable 
liutden  will  be  as  much  of  a  check  to  usurpation  of  power 
liy  the  sovereign  as  can  well  be  provided  through  taxation, 
—  quite  as  much  of  a  check  as  a  heavier  burden. — while 
the  necessity  of  resorting  to  taxes  for  all  revenues  might 
engender  a  dangerous  revolutionary  sentiment.  If  stability 
of  government  and  peaceful  evolution  are  desired,  the  in- 
ciea^ng  revenues  from  public  works  are  a  reassuring  sign  of 
the  times. 

The  United  States  government,  on  the  other  hand,  illus- 
trates the  disadvajitages  and  dangers  which  threaten  a  peo- 
ple whose  government  derives  sufficient  revenues  without 
recourse  to  taxes  which  are  felt  lo  be  a  burden.  'ITie  fed- 
eral government  derives  larger  revenues  than  it  needs  from 
indirect  taxes,  which  many  people  wish  lo  see  retained  for 
Other  than  revenue  purposes.  Were  the  revenues  of  the 
federal  government  derived  from  direct  taxes  of  which 
payers  were  conscious,  the  whole  course  of  Congress  would 
at  once  be  changed.  It  might  even  be  questioned  whether 
past  experience  would  warrant  us  in  expecting  revenues 
large  enougli  for  the  legitimate  needs  of  government.  It  is 
not  improbable  that  the  situation  of  the  federal  government 
is  more  disadvantageous  in  some  respects  than  that  of  a 
government  which  should  derive  its  whole  revenue  from 
proper^  or  productive  pursuits. 

It  was  an  attempt  of  an  English  king  lo  tax  the  American 
colonies,  it  may  be  mentioned  in  this  connection,  which  led 
to  the  linal  outbreak  between  this  country  and  Great  Britain, 
and  thus  to  the  establishment  of  our  liberties. 

It  is  worthy  of  note,  also,  that  a  free  people  will  submit  to 
ft  heavier  taxation  for  purposes  of  which  they  approve,  than 


^H    ft  neavie 


62  INTRODUCTION. 

people  living  under  a  despotism.    The  history  of  the  United 

States  again  serves  a^  an  illustration. 


John  Stuart  Mill  laid  down  the  general  principle  that  gov- 
ernments should  do  what  they  could  to  redress  the  wrongs 
and  injustices  of  nature,  and  Professor  Adolf  Wagner 
Berlin  has  developed  the  idea  that  the  taxing  power  should  ' 
be  used  as  a  lever  for  bringing  about  a  more  desirable 
distribution  of  wealth.  Progressive  taxation  is  one  of  the 
favorite  devices  which  have  been  urged  for  this  purpose. 
Limitadon  of  (he  right  of  inheritance  and  bequest  and 
abolition  of  collateral  inheritances  ab  inUitato  have  beea 
urged  with  this  in  view. 

High  licenses  for  the  right  to  sell  intoxicating  liquors 
are  advocated  as  a  means  of  social  reform.  The  land- 
tax  scheme  of  Henry  George  has  been  described  as  simply 
reform  in  taxation,  and  it  may  be  so  considered,  although, 
as  already  explained,  he  does  not  grant  the  existence  of  a 
general  right  of  taxation,  Thucydides  said  he  was  a  dan- 
gerous citizen  who  gave  no  attention  to  politics.  Whe 
considers  the  tremendous  importance  of  tzxation,  one  feels 
inclined  to  call  him  a  dangerous  citizen  who  gives  no  atten- 
tion to  the  principlei  of  taxadon. 


CHAPTER  V. 


THE   DIFFERENT   KINDS   OF  TAXES. 
CLASSIFICATION  OF  TAXES   HAS  BECOME  lifPORTANT. 

WHAT  has  been  said  in  previous  chapters  shows  the 
small  importance  which  could  be  altaclied  in  early 
ages  to  a  classification  of  taxes.  It  was  then  sufficient  to 
mention  the  few  taxes  which  existed,  and  to  descril>e  them. 
Possibly  it  is  only  in  this  century  that  nations,  states,  and 
cities  have  had  what  may  fairly  be  termed  classes  of  taxes. 
There  are  now,  however,  taxes  of  so  many  sorts  that  one 
will  find  it  impossible  to  understand  taxation  unless  the 
different  kinds  are  arranged  in  subdivisions  and  these  char- 
acterized by  their  main  features.  The  richness  and  hilness 
of  modem  industrial  life  render  it  like  the  natural  world  in 
complexity,  and  the  student  is  forced  to  resort  lo  similar 
methods  in  his  investigations. 


THE  CtASSIFICATION  OF  THE   PHYSIOCRATS, 

Jean  Boilin  speaks  of  direct  and  indirect  taxes  in  his 
work,  "Six  Livres  de  la  Ripubli(|ue"  ;  but  this  distinction 
appears  to  have  been  made  familiar  by  the  teachings  of  the 
French  economists,  the  Physiocrats '  of  the  last  century. 
The  Physiocrats  taught  that  land  was  the  only  source  of  new 
wealth ;  and  agriculture,  consequently,  the  only  truly  produc- 


'  The  three  ir 
Tutgot. 


It  pronuaent  Fhysiociats  were  Quesnay,  Guurnay,  and 


M 


INTRODUCTION. 


tive  pursuit.  Agriculture  yielded,  so  they  taught,  not  only 
returns  on  labor  and  capital,  but  a  surplus  or  rent.  This  rent 
they  called  the  produit  net — net  product.  Now  as  this 
produit  net,  or  rent,  was  the  only  source  whence  additions  to 
existing  wealth  could  come,  they  endeavored  to  show  that 
all  taxes  must  of  necessity  be  paid  out  of  rent.  If  they 
were  laid  on  persons,  pursuits,  or  commodities,  they  would 
be  simply  shifted  to  the  landowner.  TTicy  advocated, 
therefore,  a  single  tax  on  the  rent  of  land,  and  this  tax  they 
called  direct,  because  it  was  at  once  paid  by  the  tax-bearer. 
All  other  taxes  were  called  indirect,  because  they  were 
shifted,  and  were  ultimately  paid  by  a  person  who  did  not 
in  the  first  instance  pay  them  — or,  more  properly  speaking, 
advance  them.  The  distinction  which  the  Physiocrats 
made  has  become  the  generally  accepted  principle  for  clas- 
sification both  in  the  practical  administration  of  public  affairs, 
and  in  science.  Taxes,  it  is  generally  stated,  are  direct 
which  are  borne  ultimately  by  the  one  upon  whom  they  are 
in  the  first  instance  laid,  while  taxes  are  called  indirect  when 
they  are  paid  by  one  person  and  by  him  shifted  to  another. 
Those  taxes  which  the  Physiocrats  considered  indirect  have 
since  their  lime  been  held  to  be  partly  direct  and  partly  in- 
direct ;  for  sul>sequcnt  writers  have  entertained  different 
views  about  the  incidence  of  taxes  —  the  technical  phi 
which  refets  to  the  real  as  opposed  to  the  nominal  payment 
of  taxes.' 


OTHER  CL.*.SSinCATKJNS. 


No  economic  writer  now  believes  that  a  tax  on  rent  is 
he  only  one  not  shifted.     The  incidence  of  taxation  has, 

'  Fawcelt'i  licfinilion.     The  real  or  ulliniate  payment  of  taxes  i 


DIFFERENT  KINDS  OF  TAXES. 

however,  long  been  a  subject  of  controversy,  and  the  distri- 
bution of  taxes  between  the  two  classes  must  vary  with  the 
ideas  of  different  writers  on  this  topic,  provided  the  old 
principle  of  classification  is  retained.  This  distribution 
must  also  change  with  every  new  theory  respecting  the 
incidence  of  taxation.  The  observation  of  the  uncertain 
character  of  this  classification  has  recently  led  to  search  for 
new  principles  for  classification.  Some  scholars  have  adopted 
new  terms  for  the  main  kinds  of  taxes,  while  others  have 
retained  the  old  terms,  but  have  defined  them  differently. 
It  may  be  well  to  consider  one  or  two  classifications. 

Professor  Rau  of  Heidelberg  divided  all  taxes  into  as- 
sessed taxes  and  expenditure  taxes.  Assessed  taxes  were 
defined  as  taxes  levied  on  the  basis  of  an  assessment  or 
valuation.  The  object  taxed  is  assessed  or  valued.  Ex- 
penditure taxes  were  defined  as  taxes  levied  on  articles  of 
consumption,  such  as  food,  clothing,  and  the  like  ;  or  liter- 
ally, "  taxes  levied  on  account  of  a  transaction  in  which  an 
individual  manifests  an  intention  of  undertaking  a  consump- 
tion." 

It  may  be  objected  to  this  classification  that  it  is  not 
sufficiently  inclusive,  and  also  that  it  does  not  direct  atten- 
tion to  the  main  features  of  the  two  taxes.  Many  stamp 
duties '  could  not  be  well  included  under  either  class,  and 
taxes  on  commodities  are  after  all  frequently  based  on  an 
assessment  of  the  object  taxed. 

Senator  Sherman,  in  a  speech  on  the  income  lax  in  the 
United  Slates  Senate  in   1871,'  incidentally  divides  taxes 

'  Stamps  on  checki  and  bills  of  exchange  could  nnl  be  included. 
il  alto  difficult  to  Icll  bow  many  of  our  license  taxes  could  be  Ivuughl 
iritbio  eltbei  class. 

*  Janiiuy  15.    See  his  "  Speeches  and  Reports  on  Finance  and  Tax 
ioD."    Kew  York,  1S79. 


66 


INTRODUCTION. 


into  these  two  classes :  taxes  on  posscssiot^s,  and  taxes  oo 
consumption.  The  same  objections  would  hold  ogainst 
this  classification,  and  in  addition  it  may  be  said  that  a  dis- 
tinction ought  clearly  to  be  made  between  property  and 
income. 

The  distinction  between  direct  and  indirect  taxes  ought 
to  be  retained,  if  possible,  as  it  has  been  so  universally 
introduced  ;  but  each  kind  of  taxes  should  be  so  defined  as 
to  separate  it  clearly  from  the  other,  and  so  as  to  make  it 
correspond  to  well-known  facts  rather  than  more  or  less  con- 
jectural theories.  The  recent  efforts  to  define  direct  taxes 
and  indirect  taxes  with  more  precision  scujii,  therefore,  to 
be  a  move  in  the  right  direction,  and  two  of  these  defini- 
tions are  worthy  of  note. 

Paul  Leroy-Beaulieu  in  his  "TYaiti  de  la  Science  des  I 
Finances,"  gives  this  definition :  "  Direct  taxes  are  those  ' 
which  the  legislator  intends  should  be  paid  at  once  and 
immediately  by  him  who  bears  their  burden.  They  strike 
at  once  his  fortune  or  his  revenue,  and  every  intermediary 
between  him  and  the  treasury  is  suppressed,  and  a  rigorous 
proportionality  is  sought  between  the  lax  and  his  fortune  or 
ability  to  pay  taxes." 

Indirect  taxes,  on  the  other  hand,  are  defined  by  Leroy- 
Beaulieu  as  "  those  which  the  legislator  does  not  intend  should 
be  paid  at  once  and  immediately  by  him  who  bears  their 
burden,  and  he  docs  not  seek  lo  proportion  ihem  to  his 
revenues  or  fortune.  The  legislator  seeks  lo  lay  them  on 
the  one  who  it  is  intended  should  bear  their  burden  in  a 
'oundabout  way.  Intermediaries  are  put  between  him  and 
the  treasury," 

The  income  lax,  land  tax,  and  tax  on  personal  property, 
on  successions  and  gifts,  and  on  horses  and  equipages,  are 
included  under  direct  taxes,  while   taxes  on  commodities. 


I 


DIFFERENT  KINDS   OF  TAXES.  67  - 

stamp  duties,  and  fees  for  registering  or  recording  legal  docu- 
menls  are  by  this  definilion  placed  among  the  indirect  taxes. 

It  may  again  be  objected  that  the  intention  of  the  legis- 
lator is  too  uncertain  an  element  for  the  characterization  of 
a  scientific  conception,  while  the  facts  in  regard  to  the 
repercussion  of  taxation  are  often  uncertain.  Was  the  tax 
of  two  cents  formerly  laid  on  bottles  of  patent  medicine 
which  sold  at  retail  for  fifty  cents,  paid  by  the  consumer 
or  manufacturer?  Which  one  did  the  legislator  seek  to 
relieve  when  he  removed  the  tax? 

Professor  Knies  ^ves  the  following  definition,  which  seems 
to  me  preferable  :  "  Direct  taxes  are  taxes  which  are  based 
on  an  assessment  of  a  person's  property  and  business,  or 
bear  directly  on  the  person  of  the  tax-payer.  Indirect  taxes 
are  taxes  not  based  on  such  an  assessment,  but  taxes  which 
are  levied  when  the  existence  of  a  taxable  object,  or  source 
of  taxes  (productive  property),  is  presumed  from  other  evi- 
dence than  that  of  direct  assessment  or  valuation."  ' 

This  definition  characterizes  taxes  according  to  the  source 
whence  the  power  to  pay  them  is  derived.  Land  is  taxed 
because  it  yields  an  income  and  a  tax  can  be  paid  out  of 
this  income.  It  is  the  source  of  the  tax.  A  carriage  horse 
kept  for  pleasure  is  not  a  source  of  income,  but  it  is  pre- 
sumed that  the  owner  of  the  horse  has  an  income  out  of 
which  the  tax  may  be  paid.  The  existence  of  a  source  of 
taxes  is  inferred  from  an  evident  fact.  This  is  similar  to  the 
prociple  on  which  the  Physiocrats  based  their  classification. 
The  direct  tax,  according  to  both  the  Physiocrats  and  Knies 
is  that  laid  on  th»  source  of  the  tax. 

The  essential  point,  as  I  take  it,  is  not  whether  the  tax  is 
paid  directly  or  indirectly  by  the  one  who  bears  the  burden, 


'  Tianslaltd  from  my  maniiscripl  n 


-  68  INTRODUCTION. 

important  as  that  is  in  many  ways,  but  the  nature  of  the 
ecDuomic  goods  on  which  the  tax  is  laid  should  be  made 
decisive  in  separating  taxes  on  things,  and  then  other  taxes 
may  advantageously  be  grouped  about  these. 

Taxes  on  real  projierty  and  on  incomes  are  by  general 
consent  direct  taxes.  Property  and  income  are  assessed 
and  taxes  are  imposed  according  to  some  rule  of  propor- 
tion, but  income  and  property  ore  not  necessarily  taxed  in 
the  same  proportion.' 

Indirect  taxes  are  taxes  on  articles  of  food,  drink,  and 
clothing,  or  articles  of  consumption,  or,  as  is  most  frequently 
said  in  America,  on  commodities.  An  accessory  circum- 
stance is,  that  they  are,  as  a  rule,  paid  by  a  dealer  who  adds 
the  tax  paid  with  a  protit  to  the  price  of  the  article.  This 
does  not  invariably  happen,  for  sometimes  the  dealer  is  so 
situated  that  he  must  bear  the  tax,  although  it  is  obviously 
the  intention  of  the  legislator  in  most  cases  that  he  should 
shift  the  burden.  When  I  import  my  own  books,  however, 
the  tax  I  pay  on  their  value  is  as  truly  indirect  as  when  I 
purchase  the  books  of  a  foreign  dealer  ;  but  I  usually  save  by 
doing  so,  because  I  am  not  then  obliged  to  pay  a  profit  on 
the  duly.  When  a  Parisian  brings  food  into  the  city  ot 
Paris,  it  is  taxed  by  the  municipal  authorities,  and  the  tax  is 
an  indirect  one  whether  the  food  is  designed  for  his  own  use 
or  for  sale.  This  definition  includes  customs  duties  and  in- 
ternal revenue  taxes,  which  are  mainly  thought  of  by  the 
economist  when  he  uses  the  term  indirect  taxation. 

The  indirect  system  of  taxation  arose  when  Parliament,  in 
the  reign  of  Charles  II.,  "divested  the  landed  gentry  of  all 
feudal  obligations  to  the  crown,  without  touching  their  privi- 
leges," and  replaced  these  obligations  by  taxes  on  beer. 


»  Zurich  and  Basel  have  differi 


imple. 


DIFFERENT  K!NDS  OF  TAXES. 


m 


These  w 


e  all  taxes  on  articles 


wine,  tobacco,  and  spirits,' 
of  consumption. 

The  definition  of  direct  taxes  may  now  be  completed  by 
adding  other  taxes  which  it  has  generally  been  agreed  to 
call  direct,  and  which  will  be  found  to  have  certain  charac- 
teristics in  common,  as,  for  example,  that  they  imply  a  list 
of  taxable  persons,  natural  and  artificial,  and  that  they  are 
proportioned  more  nearly  to  the  ability  of  the  tas-payer  than 
can  well  be  the  case  with  indirect  taxes.  Sometimes  direct 
taxes  carry  with  them  the  assessment  of  all  a  man's  fortune, 
more  often  of  his  total  income,  and  perhaps  still  more  fie- 
quentty,  the  valuation  of  all  of  certain  spedes  of  properly ; 
whereas  in<lirect  taxes  are  specific,  a  fixed  charge  for  an  ob- 
ject without  assessment,  as  so  much  a  pound  for  sugar ;  or 
the  single  object  alone  is  valued  and  taxed  without  reference 
to  the  value  of  other  property  which  the  tax-payer  or  tax- 
bearer  may  or  may  not  have.  I  would  then  give  this  as  a 
definition  of  direct  taxes. 

Direct  taxes  are  taxes  on  trades  (including  any  branch  of 
business),  on  pursuits,  on  property  consisting  of  other  eco- 
nonoic  goods  than  articles  of  consumption,  and  on  income. 

This  definition  includes  taxes  on  articles  of  luxury,  such 
as  dogs,  horses,  carriages,  and  also  on  successions  and  gifts. 

Indirect  taxes,  on  the  other  hand,  are  taxes  on  articles  of 
consumption,  or  on  commodities,  as  that  term  is  now  usually 
understood,  and  also  taxes  levied  on  occasion  of  certaia 
transactions,  as  the  payment  of  money  by  check,*  or  the  re- 
cording of  deeds  or  mortgages.  The  following  table  will  help 
the  reader  to  understand  this  classification,  and  also  the 
various  subdivisions  of  these  two  classes :  — 


^ 

HL.^.^^^^^^^^^^1 

B^^^^l 

r 

I^^^^H 

^M 

H 

^^^^^1 

^^^^^v 

^^^M 

^^^^^H 

^^^^^^1 

c£ 

^^^H 

z 

i^lhii           ^H 

^^B 

g 

^^H 

r 

m 

^H 

^H 

H 

k 

M- 

["" 

IJ    J 

■ 

41 

!    M 

3' 

^^B 

^^^^^ 

9 

.  J^ 

f4l          ■ 

^^B 

Llij 

" 

■ 

P 

(J 

r 

111          1 

-M              ■ 

■ 

1      J 

DIFFERENT  KINDS  OF   TAXES. 


71 


Direct  taxes  are  divided  into  two  main  sub-classes : 
namely,  real  and  personal  taxes.  It  is  to  be  noticed, 
however,  that  these  terms  are  not  used  with  the  meaning 
which  is  current  in  the  United  States,  Real  taxes  are  taxes 
on  things,  as  the  word  real  {res)  signifies.  A  tax  on  land  is 
an  example.  It  is  a  certain  charge  resting  on  the  land, 
and  has  no  reference  to  any  particular  owner.  Land  in 
Ballimore  in  the  year  1887  was  taxed  for  state  and  city  pur- 
poses f  1.78J  on  the  Sioo  of  valuation,  and  the  personality 
of  the  owners  was  not  at  all  involved.  One  owner  of  land 
in  the  city  might  be  able  to  obtain  two  or  three  times  as 
much  from  land  worth  Siooo  as  another,  but  this  fact  could  , 
not  be  brought  into  consideration  by  the  assessors.  One 
r  might  be  largely  in  debt  for  the  land,  while  others 
owned  their  land  free  from  obligations ;  but  this  likewise  was 
ot  a  qriestion  involved.  Business  taxes  are  also  regarded 
s  real  taxes,  as  they  are  taxes  on  pursuits.  The  more 
prominently  the  personal  element  is  brought  forward,  the 
closer  the  resemblance  to  a  personal  tax.  When  each  per- 
n  engaged  in  a  given  occupation  is  charged  a  certain  sum 
per  year,  no  consideration  of  the  personal  element  enters 
into  the  tax.     This  may  also  be  said  of  a  tax  based  on  cap- 

•    ital  employed  or  rental  value  of  premises.    Things  are  taxed 
—  using  the  word  things  in  the  broadest  sense  so  as  to  in- 
clude transactions  and   occupations.     When   the   personal 
I  ,  ability  of  the  merchant  or  physician,  as  formerly  in  the  New 

England  colonies,  was  estimated,  and  this  was  allowed  to 
influence  the  amount  of  the  tax,  it  in  so  far  approached  the 

I  nature  of  a  personal  tax. 
Personal  taxes  are,  then,  taxes  on  persons.     An  income 
tax  is  the  chief  of  personal  taxes,  now  that  poll  tax  or  capi- 
tation tax  is  generally  held  to  be  antiquated,  and  has  been 
sbolished  in  most  places.    A  man's  income  is  taxed,  re- 


I 


INTRODUCTION. 


1 


gardlcSB  of  its  source,  in  a  properly  constnicted  income  ta*. 
It  may  come  from  lands,  houses,  bonds,  or  pursuits,  but 
this  is  of  no  consequence.  A  person  from  one  source  and 
another  derives  an  annual  revenue.  It  is  something  which 
gathers  aliout  a  person.     It  is  properly  called  a  personal  lax. 

This  distinction  is  of  great  practical  importance.  A  tax 
on  land  can  have  no  reference  to  a  mortgage,  because  it  i 
a  charge  on  a  thing,  and  the  fact  that  the  land  is  mortgaged 
is  a  personal  matter.  The  mortgage  may,  hi)wever, 
propriety  be  exempted  from  taxation  on  the  ground  that  it 
and  the  land  together  represent  but  one  source  of  taxes ; 
and  also  on  other  grounds  which  will  be  discussed  hereafter. 
An  income  tax  allows,  on  the  other  hand,  a  deduction  of 
interest  paid  on  the  mortgage  from  income,  because  that 
lessens  income.  Income  is  what  is  left  after  business  ex- 
penses are  paid.  Personal  expenses,  like  house-rent,  may 
not  with  propriety  be  deducted  from  income  before  it  i 
taxed,  because  income  exists  for  the  sake  of  personal 
expenditures. 

Taxes  on  property  are  divided  into  taxes  o 
and  movable  property,  called  in  the    Uniteil  States  real^ 
and  personal  properly  respectively. 

Business  taxes  are  assessed  taxes  when  they  are  a  percent- 
age on  a  valuation,  as,  for  example,  a  certain  percentage  on 
all  the  capita!  employed  in  a  business,  "lliey  are  the  ordi- 
nary licenses,  when  they  are  a  fixed  charge  for  the  privilege 
to  pursue  an  occupation.  This  is  common  in  the  soitlhem 
states,  and  they  are  often  graduated  with  reference  to  the  cap- 
ital employed,  as  in  Maryland,  where  business  men  are  roughly 

'  Or  real  cslale.     "  Real  eilate  for  the  purposes  of  (ajialion  shall 
include  all  lands  within  ibis  state  and  all  buildings  a 
creeled  on  oi  affixed  to  the  same."     "  Public  Slatulei  of  Maiitachu- 
ictt*,"  Title  III.,  Otapter  XI.,  §  3. 


DIFFERENT  KINDS  OF   TAXES. 


n 

divided  into  a  few  classes  according  to  the  amount  of  their 
stock  and  the  license  graded  accordingly.  The  licenses  are 
specific  and  not  a  percentage  charge,  and  vary  from  ti  z 
to  $150  for  those  "  who  barter  or  sell  goods." 

A  franchise  tax  is  a  tax  on  a  franchise  for  a  corporation. 
This  is  not  a  tax  on  capital  or  on  real  estate,  and  does  not 
exclude  additional  tajiation,  II  is  payment  for  a  privilege.' 
A  franchise  tax  has  become  a  popular  form  of  taxing  rail- 
roads in  the  United  Slates,  and  is  usually  a  percentage  of 
gross  receipts  which  varies  with  the  amount  of  gross  receipts 
per  mile. 

Indirect  taxe*  are  either  taxes  on  goods  manufactured  or 
produced  at  home  fpr  home  consumption,  or  taxes  on  com- 
modities entering  the  home  market  or  leaving  it,  or  taxes 
levied  on  occasion  of  certain  transactions,  Internal  revenue 
taxes  are  national  in  America,  as  they  are  levied  by  the 
federal  government.  The  chief  commodities  subject  to  these 
taxes  are  intoxicaring  Uquors  and  tobacco  id  its  various 
forms.  The  states  are  unable  to  make  use  of  their  taxes, 
first,  because  the  federal  government  has  made  use  of  them, 
and  has,  as  it  were,  already  occupied  the  ground;  and  second, 
because  taxes  laid  on  commodities  produced  or  manufactured 
in  one  state  would  tend  to  drive  the  business  to  another,  and 
our  slates  are  forbidden  by  the  federal  constitution  to  protect 
themselves  by  taxes  laid  on  their  frontiers  as  a  counterpoise. 
Ebewhere,  however,  certain  taxes  on  commodities  may  be 
found  within  states,  and  on  the  continent  of  Europe  it  is 
common  for  cities  to  raise  revenue  on  food  products  when 
brought  into  the  cities.     Cities  like  Paris  are  for  this  purpose 

I  So  decided  in  Maryland  by  the  Court  of  Appeals,  which  deduct 
th>I  '■  [here  is  a  dwlinclion  belwecn  a  tax  on  property  and  on  fran- 
Chixo."  Slate  V.  FhiUdelphia,  Wilminelon,  &  Ddlimorc  Railroad,  45lh 
Ud.  37S.    See  "  Maiyland  Tax  Commisuon  Report,"  1S8S,  page  38. 


74 


INTROD  UC  TION. 


surrounded  by  a  line  of  little  laxing-statioos — 
custom  houses,  as  it  were. 

Customs  duties  may  be  laid  on  goods  leaving  the  country, 
and  are  thus  laid  in  Brazil,  some  of  the  West  India  Islands, 
and  elsewhere.  Customs  duties  are  by  the  federal  consti- 
tution limited  in  the  United  States  to  duties  on  imports. 

Taxes  are  levied  when  certain  transactions  take  place,  in 
particular  when  property  changes  hands.  Charges  are  ex- 
acted for  recording  deeds,  mortgages,  assignment  of  leases, 
release  of  mortgages,  etc.  Cotirl  charges  fall  likewise  under 
this  head,  as  well  as  stamp  duties  on  checks,  bills  of  exchange, 
promissory  notes,  and  many  other  documents.' 

Modem  writers  on  finance  use  the  word  /«  as  a  special 
return  made  by  an  individual  for  a  special  service  on  his 
behalf  performed  by  public  authority,  when  the  service, 
although  rendered  for  the  sake  of  the  general  public,  con- 
veys a  special  advantage  to  the  one  who  is  asked  to  make  a 
contribution,  provided  the  fee  does  not  exceed  the  cost.* 
The  services  rendered  by  civil  courts  serve  as  an  illustration. 
One  who  maintains  his  rights  in  the  courts  is  supposed  lo 
confer  an  advantage  on  the  public.  A  question  which  my 
neighbor  has  settled  for  himself  in  the  courts  may  save  me 
the  expense  of  a  long  and  tedious  htigation.  As  the  one 
who  calls  for  the  services  of  the  court,  however,  is  supposed 
to  derive  a  particular  individual  advantage  therefrom,  it  is 


'  Most  stamp  duties  in  America,  have  been  gradually  abolished  ; 
the  Civil  Wat. 

'"Fees  (^GebahriH)  ace  receipts  from  individuals  to  covet  pari  o( 
the  expendilure  of  the  itate  un  account  of  a  service,  wbich,  allliougfa 
perfoimed  in  the  interest  uf  the  general  public,  conveys  a  special  ad- 
*aiiiage  lo  said  individuals."  —  Cari  Kttits. 

"  I'eea  are  a  special  countc [service  in  return  for  a  service  of  tha 
itate."  —  Adetf  Wagnir. 


DIFFERENT  KINDS   OF   TAXES. 


7S 


held  to  be  right  that  he  should  be  asked  to  make  a  special 
contribution.'  Fees  may  cover  coal  or  only  partially  cover 
cost ;  but  when  they  yield  a  profit,  they  should  be  regarded 
as  an  indirect  tax.  Fees  have  often  assumed  this  character, 
and  have  been  an  obstacle  in  the  way  of  certain  transac- 
tions, like  conveyances  of  land,'  which  has  been  of  great 
injury.  High  charges  for  the  services  of  the  judicial  authori- 
ties have  been  condemned  by  John  Stuart  Mill  and  others, 
because  they  render  legal  protection  a  farce  for  all  save  the 
wealthy. 

What  is  levied  in  the  form  of  a  tax  on  a  transaction  may 
really  become  a  direct  lax.  Should  a  charge  for  recording 
a  deed  vary  in  proportion  to  the  value  of  the  estate  trans- 
ferred, this  would  amount  to  a  direct  tax  on  occasion  of 
change  of  ownership. 

Fees  for  patents  at  Washington  more  than  cover  the  cost 
of  the  Patent  Office,  and  to  the  amount  of  this  excesi 
may  be  said  that  charges  for  patents  are  an  indirect  tax,  for 
the  Patent  Office  is  not  managed  for  the  sake  of  the  individ- 
uals who  apply  for  patents,  but  primarily  for  the  public 
good. 

Fees  have,  in  great  cities  in  this  country,  yielded  enor- 
mous returns.  It  is  said  that  a  single  office  in  Philadelphia 
was  a  few  years  ago  worth  Jioo.ooo  a  year  to  the  man  wh' 
held  it,  on  account  of  fees,  and  rumor  told  us  of  offices  i 
New  York  City  worth  t'^o,Qaa  and  ^75,000  a  year.  There 
has  been  a  genera!  movement  in  the  direction  of  fixed  sal- 
aries in  cities  in  place  of  paj'ment  by  fees,'  and  fees  are  then 

>Thc  fact  ihtkt  tbe  loser  often  pays  the  "CMtt,"  or  fee*,  hu  notbins 
to  do  wilh  this.     They  are  ufteti  transferred  to  him  as  a  sort  of  penalty. 

*  In  Englatiil.  for  example. 

'The  constiluliuti  of  Maryland  rendets  this  cotnpulsoiy,  save  i 
few  cases. 


7S  INTRODUCTION. 

uniform  rate.  An  income  tax  of  one  per  cent,  on  all 
incomes  in  excess  of  f6oo,  and  only  on  that  excess  would 
be  called  degressive.  It  is  sliglilly  progressive.  It  is,  for 
example,  one-half  of  one  per  cent,  on  an  income  of  f  1200, 
and  two-thirds  of  one  per  cent,  on  an  income  of  1 1 800.  As 
the  progression  is  so  slight,  it  is  called  degressive,  not  pro- 
gressive.    It  has  also  been  called    progressional.' 

Certain  designations,  like  ordinary  or  regular  and  ex* 
traordinary  taxes,  are  sufficiently  defined  by  the  terms 
employed. 

Taxes  may  be  divided  into  apportioned  and  percentage 
taxes.  Apportioned  taxes  are  taxes  which  are  distributed 
among  various  political  units,  such  as  states,  counties,  towns, 
and  cities.  Direct  federal  taxes  serve  the  purpose  of  illus- 
tration. As  just  mentioned,  they  must  be  distributed  among 
the  states  in  proportion  to  population,  and  the  percentage 
must  be  determined  afterwards  by  the  states.  County  and 
state  taxes  are  ajjportioned  among  the  towns  in  New  Eng- 
land, alihoiigb  this  apportionment  is  based  on  a  previous 
valuation  of  property. 

Taxes  in  Maryland  are  percentage  taxes.  A  certain  rate 
is  levied  on  all  property  in  the  state,  and  collected,  without 
any  apportionment  among  the  local  political  units.*  It  will 
be  noticed  that  in  the  case  of  the  apportioned  taxes,  the 
amount  to  be  collected  is  determined  in  advance,  whereas 
the  percentage  may  vary  more  or  less.  The  percentage 
taxes,  on  the  other  hand,  yield  a  more  or  less  uncertain 
amount,  while  the  percentage  is  invariable. 

■  Sec  Walker'i  "Political  Economy,"  zd  edition,  Part  VI.,  Chaplet 

XVI. 

'  The  German  expressions  ue  R<par(ilionssUuern  and  Qualitik- 
lleuern  ;  the  French,  imfSls  de  rtparlitiail  and  imptti  dt  quohli. 


CHAPTER  VI. 


DIRECT   AND   INDIRECT   TAXATION   COMPARED,' 


INDIRECT  TAXES  ARE 


TAXES   C 


COMMODITIES. 


INDIRECT  taxes  are  for  the  most  part  taxes  on  commod- 
ities; in  other  words,  on  what  we   eat   and  wear  and 
'  consume  in  other  ways,  or  on  raw  materials  and  implements 
'   used  in  manufacturing  goods  for  purposes  of  consumption. 
They  are  called  indirect  taxes  Ijccause  they  are  usually  paid 
I   in  the  first  instance  by  one  person  and  shifted  by  him  to 
f  another.     The  importer  of  salt,  sugar,  and  coal  pays  taxes 
r  on  these  commodities  when  they  enter  the  territory  of  ihe 
United  States,  adds  them  to  [he  price  of  his  commodities, 
sells  them  to  some  one  else,  perhaps  a  wholesale  dealer, 
who  in  turn  disposes  of  them  to  a  retailer,  having  added 
the  tax  and  a  profit  on  the  money  which  he  advanced  in 
payment  of  the  tax.     The  retailer  finally  sells  them  to  you 
and  me,  but  by  this  time  the  tax  has  been  turned  over  sev- 
[  eral  tiroes,  and  has  grown  like  a  snowball  rolling  down  hill. 
['  To  the  relailer  the  tax  has  Itecome  an  indistinguishable  part 
of  the  price  which  he  pays,  and  on  which  he  must  derive 
a  profit  from  us,  the  consumera.     Thus  indirect  taxes  roll  up, 
and  roll  up  every  time  one  person  shifts  them  upon  another, 
until  finally  the  augmented  burden  rests  upon  the  shoulder 
^L'  of  the  real  tax-payer.    An  indirect  tax  is  thus  a  tax  which 

^B   entii 


I 


»  It  i»  proper  t 

.0  say  that  n  cor 

isideralilc  portion  of  t 

his  chapler  bai 

•Iieiidy  appearci 

!    in    the   Baltin 

•OTi^  Sun  IS  an  aitict 

e  in  my  aeries 

entitled  "  VioWn 

isofTg.day." 

so 


jNTKonucrro.v. 


violates  one  of  the  celebrated  four  canons  of  taxation ;  for 
it  takes  from  llie  pockets  of  the  tax-payer  far  more  than  it 
puts  into  the  pubUc  treasury.  It  is  a  wasteful  kind  of  taxa- 
tion. This  is  not  "  mere  theory."  It  is  a  fact  of  which 
any  one  can  satisfy  himself  by  conversation  with  intelligent 
merchants  who  understaod  the  operations  in  which  they 
are  engaged. 


INDIRECT  TAXES 


THE  PRINCIPLE  OF   EQCALnY. 


Another  accepted  canon  of  taxation  is,  that  its  amount 
should  be  measured  in  each  case  in  proportion  to  ability 
or  the  revenue  which  a  citizen  of  the  commonwealth  enjoys. 
This  is  what  is  called  equality  of  taxatioa.  Ckjvernmenl 
should  exact  equality  of  sacrilices  of  us  all.  An  income 
tax  honestly  assessed  and  honestly  collected  meets  the  re- 
quirements of  this  canon.  How  does  the  case  stand  with 
indirect  taxation?  This  is  taxation  of  consumption;  but 
does  consumption  of  taxed  commodities  vary  with  income? 
We  import  salt  and  tax  it  nearly  fifty  per  cent,  of  its  value. 
Does  the  rich  man  consume  more  salt  than  the  poor  man  ? 
Do  you  increase  the  amount  of  salt  in  your  soup  with  an 
improvement  in  your  financial  condition?  It  is  said  that, 
on  the  contrary,  the  amoiml  of  salt  consumed  by  the  poor 
man  is  greater  than  that  consumed  by  the  rich  man,  be- 
cause the  latter  uses  other  condiments,  while  salt  is  often 
the  only  seasoning  the  former  enjoys.  We  have  in  a  tax 
like  this  what  is  called  a  regressive  Lix,  a  tax  which  increases 
as  income  decreases  —  the  worst  kind  of  a  tax  and  the  most 
unjust.  The  tax  on  sugar  is  over  seventy-five  per  cent,  on 
value,  and  from  it  a  lai^e  part  of  our  revenue  is  derived. 
It  is  similar  in  principle,  although  there  is  a  difference  in 


DIRECT  AND  INDIRECT  TAXA  TION  COMPARED.   81 

»tes  according  to  value  of  sugar,  so  that  higher  grades  pay 
:,  and  it  is  true  that  people  of  large  means  consume 
more  than  poor  people.  But  the  difference  in  rate  and 
m  quantities  consumed  by  no  means  corresponds  to  differ- 
ences in  incomes.  It  may  be  doubled  whether  a  man  with 
ten  thousand  a  year  consumes  less  than  one  with  fifteen 
thousand,  and  he  certainly  does  not  consume  an  inferior 
'.quality  of  sugar.  A  man  with  two  hundred  thousand  a  year 
lot  consume  twenty  times  as  much  as  one  with  two 
thousand  a  year,  much  less  will  he  consume  one  hundred 
times  as  much.  Here  we  still  have  the  regressive  lax.  But 
take  even  the  tax  on  silks  imported,  which  yields  fifteen  mil- 
lions a  year,  and  appears  to  be  one  of  the  fairest  of  indirect 
taxes.  The  rale  is  almost  fifty  per  cenL  Silk  can  hardly 
be  called  an  article  of  superfluous  luxury  at  the  present  time, 
ssd  a  lawyer  who  supports  a  family  on  three  thousand  a  year 
is  taxed  out  of  all  proportion  higher  than  the  plutocrat  whose 
Income  is  three  hundred  thousand  dollars.  It  is  needless 
ntinue  illustrations.  With  the  progress  of  democratic 
thought,  the  idea  of  progressive  taxation  meets  —  rightly  or 
mgly,  that  need  not  be  discussed  here  —  with  increasing 
bvor ;  and  some  of  the  slates  where  the  principles  of  de- 
mocracy are  carried  farther  than  anywhere  else  in  the  world, 
Wie  Swiss  cantons,  have  recently  introduced  progressive  taxes 
n  property  and  on  income,  but  our  federal  government  relies 
iirholly  on  a  system  of  regressive  taxation. 

But  this  is  not  all.  Take  up  any  treatise  on  taxation  and 
Tcad  the  arguments  in  favor  of  indirect  taxation,  and  what 
b  the  first  thing  to  attract  attention?  It  is  that  with  the 
present  calls  upon  civiliied  governments,  and  with  the  un- 
willingness of  people  to  pay  direct  taxes,  and  the  resistance 
irtiicb  men  of  means  offer  to  high  direct  taxes  in  propor- 
'  Q  to  income,  it  is  practically  impossible  to  maintain  the 


62  INTRODUCTION. 

modem  government  without  large  contributions  from  people 
of  limited  resources,  and  the  only  way  to  tax  them  is  by 
indirect  methods ;  in  otlier  words,  mingling  taxes  with  prices 
paid,  so  that  goods  cannot  Ije  bought  without  paying  taxes. 
It  is,  too,  worthy  of  notice  that  the  English  system  of  indi- 
rect taxation  which  we  have  inherited  originated  in  the  cor- 
rupt reign  of  Charles  11.,  about  two  hundred  years  ago. 
Then  the  burden  of  government  rested  upon  the  land  held 
by  feudal  tenure,  but  the  Parliament  of  Charles  II.,  "by  a 
majority  of  two  only,  divested  the  landed  gentry  of  all 
their  feudal  obligations  to  the  crown  without  touching  their 
privileges,  and  as  compensation  to  the  state  imposed  an 
excise  duty  upon  beer,  spirits,  wine,  tobacco,  and  numerous 
other  articles.  ...  It  marked  the  dawn  of  our  modem 
system  of  indirect  taxation;  and  the  emancipation  of  the 
aristocracy  from  special  burdens  on  land  thus  accomplished 
helped  to  alter  the  whole  current  of  our  later  fiscal  history.' 
These  are  the  words  of  an  English  writer  on  finance.' 


I 


INDIRECT 


AND   PAiniERlSM. 


There  is  a  connection  between  indirect  taxation  and  pau- 
perism which  is  worthy  of  notice.  AU  direct  taxation  plact 
a  limit  below  which  it  will  not  go,  usually  varying  i 
American  states  between  one  hundred  and  five  hundred 
dollars ;    in  other  words,  property  of  a  lower  valuation  is 

Indirect  taxation  does  not  discriminate  between  the  last 
dollar  of  llie  poor  widow  and  the  dollar  which  is  only  one 
in  an  income  of  a  million.     It  raises  prices,  reduces  the 

1  "The  Nalionit  Budget,  N«rional  Tanei  «nd  Rales,"  hy  A.  J.  WJl- 
■on  in  the  "  Engliih  Ciliien  "  Scries. 


DIRECT  AND  INDIRECT  TAXATION  COMPARED.  83 

value  of  income,  and  forces  some  who  are  already  near  the 
.»wful  line  of  pauperism  to  cross  it,  and  thus  puts  to  death 
higher  aspirations  in  a  class  of  citizens  and  lowers  the  level 
of  civilization.  But  the  absurdity  of  the  thing  is  seen  in 
this,  that  when  the  tax  has  destroyed  the  value  of  a  man  as 
an  industrial  factor  in  the  community,  what  is  taken  away  is 
igiven  back  in  almsi  I 

INPIRECT  TAXES  OBSTRUCT  TRADE. 

The  cost  of  collection  of  indirect  taxes  is  high,  and  ne- 
cessitates an  army  of  spies  and  informers.  They  thus  inter- 
fcre  with  liberty  of  movement  and  obstnict  trade  in  a  thou- 
Band  ways.  Thus,  again,  indirect  taxes  take  out  and  keep 
out  of  the  pockets  of  the  people  more  than  they  yield  to 
the  treasury  of  the  state. 

INDIRECT   TAXES   AND  MONOPOLY, 

It  may  be  laid  down  as  a  general  proposition  applicable 
to  all  modem  nations,  that  indirect  taxes  have  been  found 
to  promote  the  tendency  of  business  to  concentration  in  a 
few  hands,  and  this  is  one  of  their  most  unfortunate  effects. 
This  also  explains  the  strange  phenomenon  of  men  asking 
to  be  taxed. 

The  tobacco  manufacturers  and  the  whiskey  distillers  de- 
sire to  see  the  present  indirect  federal  taxes  on  the  commod- 
ities which  they  produce  retained,  while  the  manufacturers 
of  matches,  who  had  secured  a  monopoly,  sent  a  lobby  to 
Washington  to  work  —  fortunately  without  effect  —  against 
the  repeal  of  the  taxes  on  matches  in  1S83. 

The  reasons  why  indirect  taxes  favor  those  manufacturing 
on  a  large  scale  are  many,    A  discount,  for  example,  was 


H  JNTRODUCTWN. 

given  to  manufacturers  of  matches  in  the  United  States, 
who  bought  the  stamps  which  were  affixed  to  the  boxes  in 
payment  of  taxes,  provided  they  bought  in  large  quantities, 
and  it  increased  with  the  quantity  purchased.  If  they  (ur- 
nished  their  own  design  for  the  stamp,  the  Commissioner  of 
Internal  Revenue  was  authorised  to  give  five  per  cent,  dis- 
count on  amounts  of  not  less  than  fifty  dollars  and  not  over 
five  hundred  dollars,  and  of  ten  per  cent,  on  amounts  over 
five  hundred  dollars,  when  purchased  at  one  time,  and  — 
as  if  to  make  the  tendency  to  monopoly  irresistible  —  a 
credit  of  sixty  days  was  specially  given  to  those  manufac- 
turers of  matches  who  could  offer  satisfactory  secmity  for 
payment.  Formerly  it  was  a  simple  matter  for  any  one  to 
manufacture  matches  in  a  small  way  in  the  home  or  a  little 
shop,  but  the  entire  business  fell  into  the  hands  of  a  monop- 
oly. Similar  discounts  were  allowed  to  manufacturers  of 
other  articles  on  a  large  scale,'  While  this  discount  is  not 
a  necessary  feature  of  indirect  taxation,  this  instance  is  given 
as  an  illustration,  for  regulations  for  the  coUeciion  of  taxes  on 
commodities  will  almost  invariably  contain  some  features 
which  favor  the  large  manufacturer  or  dealer. 

It  is  a  simple  thing  to  manufacture  cigars  and  cigarettes 
and  other  tobacco  products,  and  the  business  of  manufac- 
turing cigars*  and  tobacco  was  formerly  carried  on  all  over 
the  country,  and  it  was  practicable  for  every  Southern  planter 
to  combine  the  business  of  tobacco  manufacturer  with  that 
of  farmer.  It  required  only  a  board,  a  knife,  a  little  paste, 
and  a  few  simple  implements  to  start  the  business.  Now 
bonds  must  be  given  for  payment  of  tax,  business  must  be 
done  according  to  prescribed  methods,  and  books  must  be 

1  See  "  Reviled  Sfalules  of  United  Slates,"  Title  XXXV.,  Chapler  X. 
"  Cigaiettci  huve  only  recently  been  made  in  great  quanliti 
United  SutM. 


I 
J 


DIRECT  AND  INDIRECT  TAXATION  COMPARED.  85 

kept,  to  say  nothing  of  the  discount  on  stamps,  all  of  which 
favors  the  large  dealer.  The  larger  amount  of  capital 
required  is  a  further  obstacle  in  the  way  of  the  "  small  man  " 
engaging  in  business  for  himself.  Thus  it  has  happened 
that  a  few  large  manufacturers  have  absorbed  the  bulk  of 
the  business  in  the  United  States,  and  now  object  to  a 
removal  of  the  taxes  which  they  pay. 

Coal  brought  into  Paris  for  manufacturing  establishments 
is  not  subject  to  the  indirect  tax,  called  the  octroi,  provided 
it  is  purchased  in  large  quantities ;  for  if  the  exemption 
were  granted  to  small  lots,  it  would  not  be  possible  to  dis- 
criminate between  coal  designed  for  manufacturing  purposes 
and  thai  intended  for  household  use,'  It  will  thus  always 
happen,  from  the  necessities  of  the  case,  that  taxes  on 
commodities  will,  in  the  one  way  and  the  other,  promote 
monopoly. 

INDIRECT  TAXES  CONGF.NUL  TO  DESPOTISM  AND    ARISTOCRACY. 

Indirect  taxes  are  imposed  on  people  without  creating  so 
much  discontent  as  direct  taxes  and  without  occasioning  so 
close  a  scrutiny  of  the  method  in  which  the  proceeds  of 
taxation  are  expended,  because  the  mass  of  men  do  not  real- 
ize that  they  pay  taxes  every  time  they  purchase  dry  goods  or 
groceries.  Indirect  taxes  are  an  underhanded  kind  of  taxa- 
tion. It  is  not,  then,  surprising  that  they  are  in  the  minds  of 
many  identified  with  despotism  and  aristocracy,  while  there 
is  a  growing  opposition  to  them  on  the  part  of  eolightened 
democracy  —  an  opposition  which  undoubtedly  goes  too  far 
at  times.     In  the  United  States,  it  should  be  remembered 

■  RcMcber,  "  Finsniwisscnichsft,"  Book  IIU  Chapter  III.  Il  is  al»o 
Mirl  in  Ihe  Eitiie  place  Ihal  Ilic  laies  un  glass  led  to  a  monopoly  in 


86 


mTRODUCriON. 


I 


that,  while  national  revenues  flow  from  indirect  taxes,  state  and 
local  governments  are  almost  entirely  supported  by  direct  tax- 
ation. National  revenues  are  about  as  largt;  as  the  revenues 
of  all  Ihe  states  and  all  the  local  political  units  put  together,  so 
that  we  pay  about  one-half  of  our  total  expenses  of  govern- 
ment by  the  proceeds  of  direct  taxes,  and  about  one-half  by 
the  proceeds  of  indirect  taxes.'  There  would  be  great  op- 
position to  an  extensive  system  of  direct  federal  taxes,  be- 
cause the  face  of  the  federal  tax-gatherer  in  our  states  is  not 
a  welcome  sight.  Of  course  he  is  now  everywhere,  but  he 
keeps  out  of  siglit  of  most  of  us,  and  so  we  do  not  realize 
it.  A  good  deal  of  this  feeling  against  direct  taxes  has  been 
properly  called  *'  puerile,"  and  among  a  people  sufficiently 
moral,  patriotic,  and  enlightened,  indirect  taxation  might 
perhaps  be  abolished.  We  must,  however,  take  people  as 
we  find  them,  and  at  present  its  total  abolition  is  out  of  the 
question.  Of  course,  it  is  an  undoubted  advantage  to  be 
able  to  pay  one's  taxes  in  small  amounts  from  lime  to 
time,  when  one  buys  a  few  pounds  of  sugar,  a  little  tobacco, 
or  an  article  of  clothing.  Our  indirect  federal  taxes  are  of 
two  kinds,  —  tarifT  duties  and  inietnal  revenue  taxes:  the 
former  laid  on  commodities  imported  into  the  country  ;  the 
bitter,  on  commodities  produced  within  the  country.  Now 
there  is  a  peculiarity  about  the  revenues  which  flow  from  taxes 
on  imported  commodities,  and  that  is,  that  those  taxes  are, 

'  The  censui  of  iSSo  gives  Ihe  total  amount  of  slate  and  local  taxes 
at  ^313.750,721,  while  llie  total  net  ordinary  receipts  of  the  federal  gov- 
etnment  in  the  year  ending  June  31,  iSSo,  were  $333,536,610.98,  hut 
only  $313,531^38.52  were  iTum  customs  anii  internal  revenue.  Other 
receipts  were  from  public  lands  and  "  miKeUaDeoaS  sonrce*."  Il  U 
probable,  however,  that  in  the  census  estimate  of  state  receipts  from 
taxatioD,  other  sources  of  slate  and  local  revenues  are  included  in 
■ome  CBSES,  and  these  other  sources  yield  a  considerable  portion  of  the 


DIRECT  AND  INDIRECT  TAXA  TION  COMPARED.  87 


in  the  United  Stales,  not  laid  for  the  sake  of  revenue,  but  for 
quite  another  purpose.  The  aim  of  the  tariff  taxes  is  to  ren- 
e  difficult  to  bring  commodities  into  the  United 
States,  and  thus  either  to  remove  competition  from  those 
Americans  engaged  in  the  production  of  commodities  which 
some  of  us  want  to  import ;  or,  at  any  rate,  to  serve  as  a 
breakwater,  and  to  modify  the  power  of  competition.  The 
e  which  these  taxes  afford  is  an  incidental  matter. 


DIRECTT  TAXES  PROMOTE  GOOD  CmZENSHtP. 

Direct  taxes  are  perceived  by  tax-bearers  as  well  as  tax- 
payers.' When  a  man  is  accosted  by  the  tax-collector  with 
a  demand  for  a  tax  of  two  per  cent,  on  the  selling  value  of 
his  house,  his  attention  is  thereby  called  in  a  most  emphatic 
manner  to  the  operations  of  government,  and  increased  ex- 
penditures, involving  an  additional  burden  of  taxation  on 
lands,  houses,  or  income,  promote  an  inquiry  into  these  oper- 
ations and  a  watchfulness  over  them. 

Indirect  taxes,  on  the  other  hand,  are  borne  by  the  ordi- 
nary man  as  an  indistinguishable  part  of  the  price  of  com- 
modities, and  he  is  not  always  sure  that  he  is  paying  any 
tax.  Sometimes  a  reduction  of  the  tax  does  not  produce  a 
fall  in  the  price  of  commodities  ;  and  although  this  is  excep- 
tional,' the  chance  that  changes  in  the  rate  of  taxation  may 

I  Where  a  disCitictiun  ts  made  Itetween  tax-payer  and  lax-beater  in 
this  book,  tox-beoict  a  lucd  to  inilicatc  the  one  upon  whom  the  la< 
QitimBlely  falls,  while  the  lax-payer  is  the  one  whu  payi  the  tax  in  Ihe 
first  instance.  If  the  tax-payer  is  unable  to  shifl  the  tax,  be  is  also 
the  tax-bearer. 

*  The  abolition  of  ihe  fedcial  tax  of  one  cent  on  the  ordinary  iniaJI 
hot  of  matches  id  1S83  ted  at  once  Id  a  fall  in  retail  prices  in  lloltimore 
more  than  equal  to  the  tax  removed.  Six  boxes,  wbicb  formerly  h>1iI 
for  fifteen  cents,  were  thereafter  sold  for  six. 


88  INTRODUCTION. 

not  affect  him  tempts  the  average  citizen  to  become  careless 
an<l  indifferent  about  taxation,  and  consequently  about  the 
operations  of  government.  One  of  the  most  marked  and 
most  important  distinctions  between  direct  and  indirect  tax- 
ation is  that  the  former  tends  to  encourage  good  citizenship, 
while  the  latter  cultivates  a  careless  and  indifferent  attitude 
with  respect  to  public  affairs.  One  of  the  most  unfortunate 
features  of  our  federal  finances  is  that  federal  taxation  is  en- 
tirely indirect.  Were  nearly  four  hundred  millions  of  dol- 
lars collected  yearly  by  the  federal  government  by  means  of 
direct  taxes,  it  would  change  public  sentiment  in  regard  to 
many  measures  before  Congress,  and  it  is  safe  to  say  that 
extravagance  and  wastefulness,  now  tolerated,  would  imme- 
diately become  impossible.  Bills  to  pauperize  the  nation  by 
reckless  and  indiscriminate  grants  of  pensions  would  cease 
to  trouble  us.  It  may,  indeed,  on  the  other  hand,  be  ques- 
tioned whether  people  would  lolerate  a  sufficiently  high 
rate  of  taxation  to  meet  the  necessary  and  legitimate  ex- 
penses of  government.  John  Stuart  Mill  expresses  the  fear 
that  a  substitution  of  direct  taxation  for  all  indirect  taxes 
would  be  dangerous,  because  it  would  be  felt  severely  and 
would  render  the  temptation  to  repudiation  of  public  debts 
and  obligations  too  strong  to  be  resisted,'  It  is  said  that 
high  direct  taxes  have  been  one  cause  of  the  frequent  rev- 
olutions in  Mexico.* 


A  JUDiaoire  COMBINAnON   OF  DIBECr  f. 
DESIKAHLE. 

High  direct  taxes  have  been  a  cause  of  repudiation  in 
Southern  states,  while  unwillingness  to  bear  any  direct  taxes 

1  "  Polilical  Economy,"  Book  V„  Chsptcr  VI. 

■  RoKhcr,  "  FiDaiuwuscucturi,"  Book  III.,  Chapter  IIX. 


DIRECT  AND  INDIRECT  TAXATION  COMPARED.   89 

t  all  rained  the  works  of  iniemai  improvement  in  Pennsyl- 
vania, and  endangered  the  credit  of  Maryland,  as  has  al- 
ready been  mentioned,  h  is  desirable  on  these  accounts  to 
combine  direct  and  indirect  taxes  wherever  practicable,  and^ 
to  make  direct  taxes  contribute  a  large  share  to  the  expenses 
of  government  in  proportion  as  people  become  intelligent 
and  patriotic.  While  our  slate  revenues  are  derived  chiefly 
from  taxes  of  which  the  greater  portion  are  direct,  the  num- 
of  tax-payers  as  distinguished  from  the  tax- bearers  is  far 
too  small,  for  our  direct  taxes  are  in  many  cases  shifted. 
Taxes  on  houses  are  usually  borne  in  part  by  tenants,  but 
these  tenants  do  not  themselves  pay  the  tax  in  the  first  in- 
stance ;  they  do  not  at  once  and  immediately  feel  the  effects 
of  a  change  in  the  tax  rate,  and  consequently  they  are  too 
much  inclined  to  assume  an  attitude  of  indifference  in  re- 
spect to  public  affairs.  One  of  the  best  features  of  the  Eng- 
income  tax  is  that  it  is  a  variable  tax  felt  by  the  payers, 
rising  and  falling  with  the  changes  In  the  needs  of  govern- 
ment. 

Federal  governments  like  the  United  States  and  Germany 
find  it  convenient,  on  account  of  the  structure  of  government, 
to  divide  sources  of  revenues  with  the  states,  and  to  reserve 
indirect  taxes  for  themselves.  While  there  is  much  that  is 
to  be  commended  in  this,  for  reasons  already  mentioned, 
and  for  others  which  cannot  be  here  elaborated,  — since  this 
book  deals  primarily  with  states  and  cities,  and  only  inci- 
dentally with  the  federal  government, —  it  would  be  well  not 
to  carry  this  separation  so  far  as  we  have  done  in  the  United 
States.  It  would  be  desirable  to  develop  a  complete  sys- 
tem of  federal  taxation  by  including  some  variable  taxes 
which  would  be  more  severely  felt,  possibly  by  a  lax,  among 
Others,  on  gross  receipts  of  railroads  engaged  in  interstate 
commerce. 


INTROD  UCTION. 


There  has,  in  recent  years,  been  a  very  general  improve- 
ment in  administrative  methods  used  for  raising  revenue  by 
indirect  taxation,  but  the  cost  of  collecting  the  proceeds  of 
direct  taxes  is  still  considerably  smaller,  and  they  thus  con- 
form in  this  respect  also  more  nearly  to  the  ideal  of  taxa- 
tion. The  cost  of  collecting  direct  taxes  in  France  before 
the  Revolution  was  6  per  cent.,  and  of  indirect  taxes  14 
per  cent.  In  1881  the  cost  of  collecting  the  lajtes  on 
commodities  was  estimated  at  5.13  per  cent.,  while  the  cost 
of  raising  the  revenues  from  direct  taxes  in  1876  was  3.5 
per  cent.  It  cost  14  per  cent,  to  collect  the  indirect  taxes 
in  the  Belgian  communes  before  i860.  In  England  the 
cost  of  raising  revenues  from  the  excise  in  1858  was  4.8a 
per  cent.,  from  customs  3.6  per  cent.,  and  from  direct  taxes 
4.09  per  cent.,  but  in  1859,  on  account  of  the  higher  rate  of 
income  tax,  the  cost  of  collecting  direct  taxes  was  only  2. 87 
per  cent.  In  Prussia,  in  1861  the  direct  taxes  cost  4  per 
cenL,  and  the  indirect  taxes,  with  the  exception  of  the  salt 
monopoly,  \z  per  cent.  The  cost  of  raising  revenues  from 
direct  taxes  rose  in  Prussia  in  1883-84  to  7  per  cent,,  while 
the  cost  of  raising  the  revenues  from  indirect  taxes  had  fallen 
to  9^  per  cent.' 

For  the  first  twenty-five  years  of  the  existence  of  our 
federal  government  the  average  cost  of  collecting  customs 
duties  was  a  little  less  than  four  per  cent.,  while  it  is  now 
about  three  per  cent. ;  the  cost  of  collecting  the  internal 
revenue  taxes  is  between  three  and  four  per  cent.     A  law 


'These  stalislici  are  taken   fiom   Roscher, 
Book  in.,  ChaplCT  la,  §  gt. 


■Finan 


wissenschaCl," 


DIRECT  AND  INDIRBCT  TAXATION  COMPARED.   91 


was  passed  in  1 798  by  Congress  for  a  direct  tax  on  houses, 
which  was  soon  abolished.  The  cost  of  collecting  the  revenue 
from  this  tax  appears  to  have  been  about  nine  per  cent.,  but 
this  is  no  test,  as  the  tax  was  of  short  duration,  and  never 
had  a  fair  trial.' 

The  cost  of  collecting  all  federal  revenues  difting  the 
period  immediately  succeeding  the  Civil  War  was  between 
three  and  four  per  cent.,  while  the  income  tax  cost  only  two 
per  cent.  It  was  the  cheapest  lax  collected  except  the  tax 
on  national  banks,  which  costs  nothing  to  collect.' 

It  is  common  to  give  one  and  two  per  cent,  of  taxes  in 
American  states  for  cost  of  collection,  to  which  it  would  be 
necessary  to  add  cost  of  assessment. 

The  state  of  Maryland  pays  one  per  cent,  to  the  city  col- 
lector of  Baltimore  as  remuneration  for  collecting  state  taxes 
in  the  city. 

The  expenses  of  the  Baltimore  city  collector's  office, 
salaries  included,  amounted  to  847,490.02  during  the  year 
1886,  and  during  that  year  he  collected  {4, 254,465.36, 
which  would  make  the  expenses  of  collection  over  one  per 
cent.,  say  roughly  one  and  one-tenth  per  cent.  Other  muni- 
cipal expenses  must  be  added,  but,  on  the  other  hand,  it  costs 
little  or  nothing  to  collect  certain  taxes.  The  street- rail  roads 
pay  nine  per  cent,  of  their  gross  receipts  to  the  city  treasurer, 
and  officers  of  other  corporations  send  their  taxes  to  the 
state  aud  city  treasurers  respectively.  But,  again,  stale  and 
city  allow  discounts  varying  from  seven  per  cent,  to  one-half 
of  one  per  cent,  for  early  payment  of  taxes,  and  perhaps 
this  ought  to  be  added  to  cost  of  collection,  although  it  is 

'  "Tixation  in  the  United  Siaies,  17S9-1816,"  by  Henry  C.  Ad3m^ 
pign  35-7°- 

'  See  Sherman  im  Income  Tax,  in  ihe  L'niled  Slales  Senate,  Jan.  35, 
1871,  in  bis  "  Speeches  and  Rejxitts."     New  Vork,  1879. 


INTRODUCTION. 

not  money  taken  from  the  pockets  of  the  tax-payera  at  all 
This  item  of  expense  is  a  vicious  and  needless  feature  of  the 
administrative  machinery. 

The  total  receipts  of  New  York  City  from  taxes  amounted 
10531,568,096.98  in  the  year  1886,  and  the  "Department 
of  'I'axes  and  Assessments  "  and  the  "  Finance  Department," 
together,  are  charged  with  ^361,961. 31  in  the  "appropria- 
tion account,"  which  would  be  a  trifle  less  than  one  and  one- 
sixth  per  cent.  It  must  be  remembered,  however,  that  these 
departments  have  some  other  duties  than  those  concerned 
with  the  collection  of  taxes.' 

It  is  an  impossibility  to  tell  what  it  costs  American  states 
and  cities  to  collect  their  direct  taxes,  for  returns  are  loo 
imperfect.  Nothing  more  than  guess-work  is  possible. 
From  such  examinations  as  I  have  been  able  to  make,  "I 
guess "  it  is  not  less  than  three  per  cent.,  hut  I  believe  it 
quite  practicable  for  all  larger  cities  by  better  systems  of 
taxation  and  improved  administrative  machinery  to  reduce 
the  cost  to  less  than  two  per  cent.,  and  this  is  far  below 

'  In  a  letter  ftom  Hon.  A.  J.  Perry,  counly  clerk  of  Knox  Counly, 
111.,  ibe  following  facts  regarding  asseasmEni  and  collection  arc  givi^ii : 
The  tDWHshi))  coUeclon  in  Knox  Counly  receive  Iwo  pn  cent,  uf 
an)ounl>  collected  by  Ihcm.     In  Galeshutg.  ihe  counly-scal,  the  collec- 

The  s.i1uy  of  the  county  treasurer  is  more  than  coveted  by  hi>  fees, 
which  are  one  per  cent,  of  sumi  received  ai  county  and  slate  tuxe^. 
The  assessors  in  the  townships  receive  fz.50  per  day.  The  avernge 
coil  fur  BBseuing  is  abuul  $115.00  per  township  uf  (450,000  valufttiun. 
The  following  statement  of  the  cost  of  collection  in  Illin>iis  is  found 
in  Dt.  Patten's  cs5ay  on  "  Finances  of  Stales  and  Cities  of  the  Unitcii 
States":  Tax  collectors  in  counties  with  less  than  TOfxa  inhabitants 
Teccive  three  per  cent,  of  the  taxes  which  they  collect!  in  counties  with 
from  zo,ooo  to  70,000  inhabitants,  two  per  cent.,  and  in  couniies  with 
over  70,000  inhabitants,  one  and  onu.half  per  cent.  a«  ccmpcnsaliuii  for 
their  lalur 


DIRECT  AND  INDIRECT  TAXA  TIQN  COMPARED.  93 

I  what  it  would  coat  them  to  collect  revenues  by  any  conceiv- 
able S)-stetn  of  indirect  taxation  within  iheir  reach.  It  must 
further  be  remembered  that  the  indirect  cost  of  indirect 
taxes  is  more  serious  by  far  than  the  direct  cost.  This  has 
been  amplified  in  what  has  been  said  about  obstructions  to 
I  trade  by  indirect  taxes,  their  tendency  to  foster  monopoly, 
1  and  their  expensiveness  as  seen  in  increased  cost  of  produc- 
tion, each  producer  adding  to  his  advance  until  the  burden 
tests  on  the  tax-bearer,  the  consumer.* 

When  it  is  desired  to  make  people  of  small  means  con- 
tribute to  the  support  of  government,  it  can  only  be  done 
by  indirect  taxation,  because  they  are  not  prudent  enough  to 
save  money  for  the  tax-collector,  and  it  costs  far  more  to  col- 
,   lect  direct  taxes  from  very  small  properties  or  incomes  than 
[  it  does  to  collect  indirect  taxes,'  and  is  a  greater  hardship. 
'  Direct  taxes  have    been   paid  monthly,  but  quarterly  pay- 
ments are  the  smallest  which  work  well,  whereas  indirect 
taxes  can  be  paid  day  by  day  in  purchases. 

'  Matches  which  foTmerly  mid  in  Baltimore  for  Mecn  cents  (or 
X  boies  now  »cU  for  aii  cents  for  six  boxes.  Of  the  JitTeience  of  nine 
enti,  lin  wu  Ihe  federal  tax.  A  reduction  of  six  cents  in  taxation 
I  effected  a  reduction  of  nine  cents  in  price,  llie  coat  of  getting  Ihe  six 
[  Gmt(  fmm  the  pockels  of  the  [ax-payers  In  Ihe  treasury  wns  filbi  ner 
■nX.  plus  Ihe  cost  of  the  adminialrative  machinery,  which  would  a^V-c 
e  total  cost  of  collection  about  fifty-three  per  cent. 
*  More  will  be  said  aboat  this  in  a  subaequeal  pail  of  this  work 


CHAPTER  VII. 


THE    LITERATURE    OF   TAXATION. 
PAUOTV  OF  THE   UTERATURE  OF  TAXATION. 

THE  literature  of  taxation  in  the  English  language  is 
meagre,  and  an  American  literature  on  this  subject 
can  scarcely  be  said  to  exist.  American  states  and  cities 
spend  over  three  hundred  millions  of  dollars  annually,  and 
the  annual  expenditures  have  long  been  increasing  with 
rapidity,  and  may  be  expected  to  increase  in  the  future. 
The  amount  of  these  revenues,  the  manner  in  which  they 
are  raised,  and  the  purposes  for  wliich  ihey  are  expended 
are  of  vital  concern  to  every  American  citizen  ;  yet,  strange 
as  it  may  seem,  the  present  is  the  first  work  on  taxation  in 
American  states  and  cities. 


REPORTS  OF  T.Ui 

Numerous  reports  of  tax  commissions  have  appeared,  but 
these  have  been  printed  as  public  documents  and  are  not 
readily  accessible  — a  fact  which,  as  to  some  of  them,  is  p 
haps  no  misfortune.  One  of  the  most  noteworthy  of  the 
ports  of  special  state  tax  commissions  appointed  to  investi- 
gate the  subject,  is  the  "  Report  on  I-ocal  Taxation,"  made 
by  Messrs.  David  A.  Wells,  Edwin  Dodge,  and  George  W. 
Cuyler,  commissioners  appointed  by  the  governor  of  New 
York.  The  report  was  made  in  1871,  and  was  published 
in  the  same  year.'     This  Report  has  done  more  thi 

'  New  Yoik,  Harper  &  Brolhcra 


J 


THE  UTERATVRE  OF  TAXATION. 


95 


Other  publication  to  draw  attention  to  the  subject  of  taxa- 
American  common  wealths. 

The  "  Report  of  the  Massachusetts  Commissioners  relating 
to  Taxation,"  made  in  1S75,  and  printed  as  a  public  docu- 
ment, is  a  carefully  prepared  volume  which  deserves  the 
attention  of  the  special  student.  It  advocates  the  retention 
of  the  main  features  of  the  existing  system  of  taxation  in 
fmr  states. 

The  "  Report  of  the  Revenue  Commission  of  Illinois," 
made  in  1886,  suggests  certain  reforms  in  the  taxation  of 
railroads,  and  elaborates  a  new  and  simple  scheme  for  esti- 
mating their  value.  It  also  advocates  the  separation  of  the 
sources  of  state  revenues  from  those  of  local  revenues,  and 
of  this  more  will  be  said  hereafter. 

The  "  Report  of  the  Tax  Commission  of  Baltimore,"  made 
in  1886,  presents  a  carefully  elaborated  administrative  system 
for  the  assessment  of  municipal  taxes,  which  will  be  reprinted 
in  this  volume  in  its  appropriate  place.  ■ 

The  "  Report  of  the  Maryland  Tax  Commission,"  made  in 
1888,  gives  a  description  of  the  existing  system  of  taxatioD 
in  Maryland,  and  the  appendix  contains  an  historical  sketch 
of  tax  legislation  in  the  state,  from  the  colonial  period  to  the 
present  time.  It  is  shown  in  the  body  of  the  Report  that 
railroads  in  Maryland  pay  less  than  half  as  much  as  individ- 
uals, in  proportion  to  their  property. 

TREATISES  ON   POLITICAL   ECONOMV  AND  FINANCE. 

Treatises  on  poLtical  economy  usually  have  a  few  chap- 
ters devoted  to  taxation ;  but  these  do  not  as  a  rule  go  be- 
yond very  general  considerations  j  and  when  they  do  enter 
upon  historical  devetopmentSi  or  descriptions  of  actual 
systems,  it  is  almost  invaiiably  only  natioiial  finance 


96 


INTRODUCTION. 


which  is  discussed.  Walker's  "  Policies]  Economy  " '  presents 
some  general  views  which  deserve  atlentioo.  Fawcetl's 
"  Political  Economy  " '  contains  a  chapter  on  local  taxation 
in  England,  while  John  Stuart  Mill  in  his  classical  treatise"  dis- 
cusses general  principles  with  his  usual  profuodity  of  thought 

The  great  German  works  are  far  more  inclusive.  Over 
thirty  years  ago  Professor  Roscher  of  the  University  of 
Leipsic  began  a  work  entitled  "  A  System  of  Political  Econ- 
omy," to  be  completed  in  four  volumes,  on  which  he  b  still 
working  with  that  diligent  research  which  so  characterizes 
the  German  student.  The  first  part  of  Volume  IV.  treats ' 
of  finance,  and  has  recently  appeared.'  It  makes  a  book 
of  nearly  seven  hundred  pages,  and  presents  a  sketch  chiefly 
historical  and  descriptive,  but  also  critical  and  suggestive,  of 
the  finances  of  modem  nations,  stales,  and  cities. 

The  greatest  financial  work  which  has  ever  appeared  is 
tfiat  of  Professor  Adolf  Wagner  of  Berlin,  and  this  is  also  a 
part  of  a  larger  economic  treatise.  Two  volumes  on  finance 
have  already  appeared,  and  one  or  more  are  to  follow.  Wag- 
ner exhibits  in  the  treatise  the  results  of  careful  research,  of 
legal  training,  of  some  practical  political  activity,  and  of 
wonderful  profundity  and  originality  of  thought.  The  book 
does  not  appear  to  be  in  every  respect  well  arranged,  and  it 
is  not  easy  reading  for  one  who  has  not  a  complete  mastery 
of  the  German  language,  Wagner  has  also  been  blamed  for 
long  digressions  on  matters  like  railroads  and  forestry,  but  it 
seems  to  me  without  cause.  Were  political  economy  and 
finance  as  highly  developed  as  some  of  the  natural  sciences, 
familiarity  with  such  topics  might  be  presupposed,  or  the 


I 


'  New,  unabridged  c<iilion,  Henry  Holt  &  Co.,  New  York,  1887. 

*  Sixth  edition,  London,  MacmilUn  &  Co.,  iSf 

*  tJtiabridged  edition. 

*  Second  eitilioa,  Slntlgut,  1SS6. 


A 


THE   LITERATURE    OF   TAXATION.  97 

reader  referred  to  other  works;  but  as  matters  are,  it  is 
often  necessary  as  one  proceeds  to  explain  thin^,  a  knowl- 
edge of  which  is  required  for  a  comprehension  of  other 
matters,  although  one  is  well  aware  that  they  could  with 
more  propriety  be  discussed  elsewhere.  Wagner's  work  is 
one  which  no  special  student  of  finance  in  our  day  can 
afford  to  ne^ect,'  whatever  may  be  his  own  views. 

The  only  complete  economic  treatise  presenting  the 
science  as  it  is  to-day  is  one  which  has  been  prepared  by 
the  co-operation  of  some  twenty-five  of  the  highest  German 
authorities,  under  the  editorship  of  Professor  Gustav  Schon- 
berg,  of  the  University  of  Tlibingen.'  The  third  volume 
treats  of  finance  and  admioisiration,  and  is,  probably,  the 
most  useful  handliook  of  all  the  German  treatises ;  at  any 
rate,  it  is  the  treatise  which  should  be  procured  by  the  student 
whose  means  will  not  enable  him  to  purchase  more  than 
one  work.  Perhaps  the  most  important  of  the  monographs 
embraced  in  this  volume  are  those  by  Helferich  on  the 
"General  Principles  of  Taxation,"  by  von  Schcel  on  the 
"  Revenues  from  Gainfiil  Pursuits,"  by  Wagner  on  "  Direct 
Taxes,"  and  by  Baron  von  Reitzenstein  on  "  I^cal  Taxation," 

One  of  the  earliest  complete  and  systematic  treatises  on 
finance  was  written  by  Professor  Lorenz  von  Stein  of  the 
University  of  Vienna,  the  earliest,  I  think,  of  the  standard 
treatises.'  Slein  is  one  of  the  highest  authorities  on  admin- 
istration, and  his  work  on  that  subject  was  the  first  attempt 
to  treat  it  as  an  independent  science.  His  "Text-Book  of 
Finance  "  treats  laws  concerning  finance  as  a  part  of  admin- 


1  "  Lehrbuch  der  PolUiichen  Ockonomif ."  Volumes  V.  aod  VI. 
F.  Wintet'lche  Vcdigshnndlung,  Lcipsic  and  Ileidelbeig. 

*  Second  edition,  Tubingen,  i8S6. 

'The  »econil  edition  »ppeared  in  1871,  the  first  probably  a  yeai 
Iwu  earlier  j  the  foaith,  ia  two  volumes,  apiicarcil  in  187S.    One  part  of 


98  INTRODUCTION. 

istrative  law,  and  is  noteworthy  on  that  account.  Stein  also 
gives  a  comparative  view  of  the  literature  and  legislation  of 
England,  France,  Germany,  Austria,  and  Italy,' 

Probably  the  American  student  will  find  the  lucid  work  of 
Paul  Leroy-Beaulieu,  "Traitfi  de  la  Science  des  Finances,"' 
easier  reading,  and  possibly  more  interesting.  'I'he  style  is 
better  than  that  of  the  German  works,  as  might  be  expected  ; 
and  Leroy-Beaulieu's  ideas,  if  less  profound,  are  more 
easily  grasjied.  Leroy-Beaulieu  is  less  original  than  Wagner, 
and  a  less  careful  historian  than  Roseher,  but  the  book  is 
systematically  and  well  arranged,  and  abounds  in  useful  posi- 
tive information  about  the  financial  systems  of  all  modem 
nations.  It  is  an  indispensable  work  for  the  carefiil  student 
of  finance. 

SPECIAL  TREATISES. 

America  has  at  last  a  work  on  one  of  the  aspects  of 
modem  finance  which  can  corapMje  favorably  with  the  trea- 
tises mentioned  above.  I  refer  to  the  thoughtful  and  well- 
written  work  by  Professor  Henry  C,  Adams  of  the  Univer- 
sity of  Michigan,  entitled  "  Public  Debts.'"  Part  III.  deals 
with  state  and  local  public  debts,  and  it  is  needless  to  say 
that  a  treatment  of  debts  is  an  essential  part  of  any  com- 

Rau's  great  work  □□  polilicnl  ecnnomy  Ireatcd  of  finance  and  ap- 
peared many  years  earlier;  but  although  Kau  occupies  an  honnrable 
posilion  in  the  histoiy  of  political  economy,  he  has  been  luperaeded 
by  more  modern  authors. 

1  Stein  i»  severely  crilicirerl  on  account  of  inaccuracies,  and  also  on 
account  of  a  strange  and  confining  use  of  technical  terms,  by  Neumann 
in  his  monograph  "  Die  Sleuer  aach  Act  Leistongs  iShigkeit."  Jena, 
18S0-1881. 

*  In  two  volumes.  3d  edition,  Paris,  iS8^ 

■New  York,  1887. 


THE  LITERATURE   OF  TAXATION.  99 

pkte  work  on  finance.    The  book  is  historical,  descriptive, 
critical,  and  suggestive,  and  is  in  every  respect  admirable. 

Cooley's  treatise  on  "  Taxation  "  gives  a  clear  statement  of 
American  law,  federal,  state,  and  local,  and  is  the  standard 
legal  work  on  the  subject. 

Mr.  T.  K.  Worthington's  "  Historical  Sketch  of  the  Finan- 
ces of  Pennsylvania"  is  the  first  careful  treatment  of  the 
finances  of  an  American  commonwealth,  and  is  of  value  as 
dealing  with  the  financial  history  of  that  commonwealth, 
which  has  perhaps  embodied  more  peculiar  features  in  its 
system  than  any  other  state.  Mr.  Worthington  discusses  at 
considerable  length  the  public  works  of  Pennsylvania,  : 
the  fiasco  which  she  made  with  them.' 

"  Statistique  Internationale  des  Villes,"  edited  by  Joseph 
Korosi,  Director  of  the  Bureau  of  Statistics  of  Buda-Pesih,' 
presents  in  the  "  deuxi^me  section  "  an  analytical  and  sta- 
tistical account  of  the  finances  of  Buda-Pesth,  Vienna, 
Trieste,  Leipsic,  Stuttgart,  Munich,  Frank  fort- on-the- Main, 
Rome,  Turin,  Venice,  Palermo,  Lidge,  Stockholm,  Chris- 
tiania,  Copenhagen,  Antwerp,  Bucharest,  Breslau,  Genoa, 
Florence,  Boston,  St.  Louis,  San  Francisco,  London,  Berlin, 
and  Paris. 

"Traits  des  Irap6ts,"  by  E.  de  Parieu,  is  a  work  in  four 
volumes  *  on  taxes,  considered  historically  and  critically. 
French  literature  and  foreign  literature  are  both  discussed, 
and  the  laws  and  customs  of  France  and  other  leading 
nations  are  presented.  National  and  local  taxation  i 
treated  at  length  ;  and  although  the  work  was  written  so  long 
since  that  many  of  the  more  recent  facts  and  theories  fail 


1  Pnbliihcd  by  the  American  Economic  Associali 


c,  May. 


100  INTRODUCTION. 

\  /"     i 

to  receive   attention.  Walker  speaks  of 'it  in  his  "  Political 
Economy  "  as  "  the  ablest  French  work  on  the  subject." 

"  Local  Government  and  Taxation  in  the  United  King- 
dom "  is  the  title  of  a  series  of  essays  published  under  the 
sanction  of  the  Cobden  Club,  and  edited  by  J,  W.  Probyn.' 
"  Reports  and  Speeches  on  Local  Taxation,"  by  the  able 
English  financier  and  politician,  George  J.  Goschen,  is  per- 
haps still  more  important.' 

"  The  National  Budget,  National  Debt,  Taxes  and  Rates,"  * 
by  A.  J.  Wilson,  is  a  volume  in  the  "  English  Citizen  "  Series, 
giving  a  condensed  but  not  well-arranged  account  of  English 
taxation,  in  which  many  points  are  not  sufficiently  elucidated 
for  the  foreign  reader,  and  I  think  not  sufficiently  for  the 
English  reader. 

"  Local  Administration,"  by  Messrs.  Rathbone,  Pell,  and 
Montague,  in  the  "  Imperial  Parliament "  Series,  is  a  very 
brief  description  of  local  government  and  taxation  s 
exists  in  England,  and  as,  in  the  opinion  of  the  writers,  it 
should  be. 

"A  History  of  Taxation  and  Taxes  in  England  from 
Earliest  Times  to  the  Present  Day,""  by  Stephen  Dowell,  As- 
sistant Solicitor  of  Inland  Revenue,  is  a  work  in  four  vol- 
umes, in  which  will  be  found  the  most  detailed  and  complete 
account  of  English  taxation  efctant,  and  it  is  of  special  value 
to  the  American  as  well  as  to  the  English  student.  The  plan 
is  a  good  one.  The  fir^t  two  volumes  treat  of  the  history  of 
taxation  in  general,  and  the  third  and  fourth  volumes  pre- 
sent the  history  of  the  particular  taxes.  Volume  I.  gives 
the  history  of  taxation  from  the  earliest  limes  to  the  Stuart 
period  and  Civii  War,  inclusive,  and  Volume  11.  begins 
with  the  lime  of  the  Commonwealth,  when  the  modem  sys- 


>  Londun,  1SS2. 


'  London,  1872. 


•  LonJon,  18S4. 


THE   UTERATURE   OF   TAXATION.  101 

tem  of  taxation  is  said  by  the  author  to  have  begun.  The 
third  volume  presents  the  history  of  direct  taxes  and  stamp 
duties ;  and  the  fourth,  of  the  indirect  taxes  on  articles  of 
consumption. 

This  is  not  intended  to  be  a  complete  bibliography,  but 
simply  a  list  of  a  few  of  the  most  noteworthy  books  for  the 
student  of  taxation,  —  those,  let  us  say,  which  ought  to  be 
found  in  any  good  working  school  or  college  library.  The 
one  who  desires  to  become  a  specialist  will  find  in  the  works 
mentioned  a  sufficient  number  of  references  to  other  works. 

OTHER   SOURCES  OF  INFORMATION, 

The  other  sources  of  information  are  official  documents 
of  states  and  cities.  The  principal  one  in  the  different 
states  and  cities  bears  different  names.  Sometimes  the  Au- 
ditor's Report  is  the  chief  financial  document  of  a  state  or 
city,  but  frequently  it  b  the  Comptroller's  Report.  The 
Treasurer's  Report,  and  Governors'  r.nd  Mayors'  Messages 
are  often  valuable.  The  "  Instructions "  which  proceed 
from  central  offices,  like  that  of  the  Comptroller- General, 
are  valuable.  The  tax  laws  are  the  foundation  of  the  va- 
rious systems  of  taxation  in  American  states  and  cities,  and 
these  are  sometimes  published  in  pamphlet  form ;  but  it  is 
frequently  necessary  to  consult  the  "  Revised  Statutes  "  of 
the  states,  and  these  ought  to  be  in  every  college  and  semi- 
nary library.  Schools  and  colleges  will  usually  be  able  to 
obtain  public  documents  of  the  states  in  which  they  are  sit- 
uated, on  application  to  the  proper  authority  at  the  capital, 
or  through  the  representatives  of  their  districts  in  the  state 
legislature.  Those  of  other  states  can  sometimes  be  pro- 
cured by  application  to  the  Secrelary  of  State,  Stale  Treas- 
urer, or  Auditor  of  State,  but  these  are  less  important  for 
any  but  the  most  advanced  students. 


PART  II. 


TAXATION  AS  IT  IS. 


I 


PART   11. 

TAXATION   AS   IT  IS. 


CHAPTER    I. 
COLONIAL    TAXATION. 

DJTRODIJCIXIRY    REMARK. 

LAWS  and  institutions  are  a  growth ;  and  consequently 
they  cannot  be  understood  without  an  historical 
examination  of  their  past.  Past,  ( resent,  and  future  are 
a  continuity  ;  and  he  only  knows  the  present  who  com- 
prehends those  events  in  the  past  which  led  up  to  the 
present,  while  he  who  worild  work  for  the  future  must 
have  some  clear  conception  of  forces  which  even  now  are 
giving  it  shape.  It  seems  desirable,  therefore,  to  precede 
a  description  of  our  actually  existing  systems  of  taxation  with 
some  account  of  their  origin  and  subsetinent  growth  ;  and, 
J  many  of  the  early  American  laws  and  customs  are  still 
in  force,  or  are  still  felt  in  existing  institutions,  it  does 
not  appear  inappropriate  to  place  a  brief  historical  sketch 
of  taxation  in  America  in  Part  II.  of  the  present  work, 
although  it  bears  the  tide,  "Taxation  as  It  Is."     It  must 

H^    be  remembered  that  our  past  is,  after  all,  quite   recent ; 

^b    that  we  hardly  have  a  past  at  all,  in  matters  like  taxation. 


I 


106 


TAXATION  AS  IT  IS. 


in  the  sense  in  which  the  great  nations  of  Europe  have  a  J 
past. 

Attention  t^  be  called  first  to  colonial  taxation ;  thea^ 
to  taxation  as  it  existed  in  1 796,  when  Mr.  Wotcott,  Seo- 1 
retary  of  the  Treasury,  made  a  report  on  taxation  in  Ameri-  T 
can  states  ;  thirdly,  to  a  transition  period  between  1 796  and  I 
the  present ;  and  finally,  to  a  description  of  the  main  feat-  f 
ures  of  our  present  laws,  and  their  workings  in  actual  prao  I 
ticc. 


THE  tXILONIES  INSIST   UPON  THE  RIGHT  TO  VOTE  THE  TAXES.' 

In  examining  the  records  of  the  American  colonies 
finds  that  while  there  was  murmuring  at  times  on  account 
of  heavy  burdens,  and  while  complaints  of  unfair  apportion- 
ment of  taxes  among  towns  or  occupations  were  not  infre- 
quent, more  concern  was  shown  regarding  that  principle,  the 
defence  of  which  ended  in  the  struggle  for  independence. 
The  spirit  which  later  resisted  a  petty  tax  because  laid  with- 
out the  consent  of  the  colonists  is  plainly  visible  in  the 
enactments  of  the  early  assemblies.  The  provision  that  no 
tax  should  be  levied  or  collected  except  with  the  consent  of 
the  people  to  be  taxed,  or  of  their  representatives,  was  com- 
mon 10  all ;  and  while  it  was  violated  and  wholly  disregarded 
at  times  by  royal  governors,  it  was  generally  conceded  to  as 
a  matter  of  prudence  and  policy.' 

'  In  compiling  thia  chapter.  Ihe  rollowing  books,  with  others,  have 
been  consulted ;  "  Records  of  MaBsichusetts  Bay  Colony,"  Arnold'! 
"  Hialory  of  Rhode  Island,"  "  Records  of  New  York,"  "  Laws  of  Penn- 
sylvaniB,"  "Laws  of  Vitgioia"  (Hcnning),  Schaifs  "  History  of  Mary- 
land," Egleston's  "  Land  System  of  the  New  England  Colonies." 

'  "The  eariy  history  of  North  Carolina  is  mainly  one  of  retisianee 
by  the  people  lo  the  governor'*  illegal  taxation."  —  Alexander  yohn- 
Itan'l  "History  of  tht  UHtUd  Stales,"  page  50. 


I 


COLONIAL    TAXATION. 


107 


In  the  earlier  days  of  the  colonies  there  was  no  great 
need  for  taxes.  The  mother  country  asked  do  assistance 
from  them ;  quit-rents  satisfied  the  demands  of  the  proprie- 
tary or  the  company,  who  in  turn  promised  at  least  partial 
protection ;  fierce  wars  had  not  yet  transferred  the  burden 
of  defence  to  the  shouldere  of  the  people  ;  the  public  wants 
of  the  colonists  themselves  were  simple  and  easily  supplied  ; 
there  were  few  officials,  and  these  were  either  wholly  without 
compensation,  or  received  but  a  few  slight  fees ;  and  the 
chief  and  almost  sole  objects  of  their  coutributtoos  were 
churches,  schools,  and  highways, 

RHODE    [SIjUTO. 

Mr.  Gardner  has  shown  that  forfeitures,  fines,  fees,  and 
payments  for  land  defrayed  nearly  all  of  the  expenses  of 
Rhode  Island  during  the  colonial  period.  The  abundant 
land  of  American  colonies,  then  later  of  American  states  and 
federal  government,  has  done  more  to  obviate  the  necessity 
of  taxation,  or  to  render  taxation  lower  tlian  it  would  other- 
wise be,  than  is  generally  understood.  Land  has  been  used 
I  in  this  country  as  an  endowment  for  office  as  well  as  in  Ger- 
many and  England,  Robert  Lenihail.  school  teacher  and 
minister,  received  104  acres  of  land  from  Newport  in  1640, 
and  100  acres  was  appropriated  for  a  school  "  for  the  encour- 
agement of  the  poorer  sort.'"  This  is  chiefly  interesting  as 
Ian  early  eitample  of  frequent  practice  in  our  subsequent  his- 
tory. New  states  have  reserved  portions  of  public  lands  — 
every  sixteenth  section  —  for  school  purposes.  The  federal 
government  in  i85a  gave  lantt  to  each  stale  equal  in  amount 
to  30,000  acres  for  each  representative  and  senator  in  Con- 
'Q 
Voluu 


I 

I 


'  Quoted  hy  Mr.  Gardner 
{   Volume  I.,  page  145. 


Joty  of  Rhode  Island," 


108  TAXATION  AS  IT  IS. 

gress ;  and  it  has  given  aoo,ooo,ooo  acres  for  the  encour- 
agement of  railroa/1  building.  Some  towns  in  Switzerland 
and  Baden,  it  is  interesting  to  note  in  this  connection,  have 
retained  public  lands,  and  a  few  derive  therefrom  a  revenue 
sufficient  to  defray  all  local  expenses  and  to  enable  them 
to  divide  a  small  sum  of  money  among  the  citizens  each 
year. 

As  is  still  often  the  case  in  Germany,  and  occasionally  in 
the  United  States,  the  acceptance  of  certain  offices  was  com- 
pulsory, and  this  was  a  means  whereby  governments  could  be 
carried  on  without  taxation.  It  is  not,  then,  so  surprising  as 
it  would  be  now  to  read  a  report  of  the  general  treasurer  of 
Rhode  Island  in  1649,  that  he  had  received  nothing  and 
had  nothing  in  his  hands ;  nor  could  this  extract  from  a  let- 
ter of  Gregory  Dexter,  town  clerk  of  Providence,  to  Sir 
Henry  Vane,  be  regarded  as  so  astonishing  as  it  would  be 
to-day ;  "  Sir,  we  have  not  known  what  an  excise  means. 
We  have  almost  forgotten  what  tythes  are;  yea,  or  taxes, 
either  to  church  or  commonwealth." 

From  1647  ^'^  "^^9  ^  '^^  taxes  levied  in  Rhode  Island 
amounted  to  _;^36oo,  or  about  ^fioo  sterling.  It  is  curious 
to  notice  that  in  1699  one  of  the  complaints  made  against 
the  colony  by  Bellmont  was  this :  "  They  raise  and  levy 
taxes  and  assessments  upon  the  people,  there  being  no 
express  authority  in  the  charter  for  so  doing."  There  is,  in 
fact,  reason  to  believe  that  one  of  the  things  against  which 
our  forefathers  in  England  and  the  American  colonies  con- 
tended was  not  against  oppressive  taxation,  but  against  the 
payment  of  any  taxes  at  all.  It  required  a  long  struggle  to 
bring  about  a  complete  and  ready  acknowledgment  of  th» 
right  of  taxation. 


I 


COLONIAL    TAXATION. 


VOLUNTARY  CONTRIBUTIONS   EARLY    REPLACED  BY  TAXES, 

As  has  already  been  noticed,  the  contributions  of  the 
colonists  were  at  first  more  or  less  voluntary  in  their  nature. 
The  church  and  the  commonwealth  were  closely  allied,  and 
as  all  who  received  the  benefit  of  the  former  felt  it  their 
duty  to  contribute  to  its  support  in  proportion  to  their 
means,  so  they  were  also  expected  to  give  in  like  manner  to 
the  maintenance  of  the  latter.  The  case  of  Rhode  Island 
has  been  cited,  and  the  records  of  Massachusetts  Bay  Colony 
also  furnish  very  clear  proof  of  this  fact.  The  General  Court, 
observing  that  many  who  were  not  freemen  nor  members  of 
the  church,  took  advantage  thereof  to  "  withdraw  their  helpe 
in  such  contributions  as  are  in  use,"  in  1638  declared  that 
every  inhabitant  in  any  town  was  liable  to  contribute  to  all 
charges,  both  in  the  church  and  commonwealth,  and  that 
every  such  inhabitant  who  should  not  voluntarily  contribute 
should  be  compelled  to  do  so.  This  example  illustrates  the 
change  that  must  have  occurred  in  all  the  colonies  at  a  very 
early  period.  Individual  selfishness  and  consequent  dis- 
honesty on  the  part  of  some  made  compulsory  contribution 
necessary,  and  thus  direct  taxes  became  a  substitute  for  vol- 
untary contributions. 


TAXES  ON  PROPERTY  AND  POLLS. 

Direct  taxes  were  laid  either  in  proportion  to  property 
held.  Teal  and  personal,  or  according  to  income,  or  as  a 
uniform  charge  upon  the  poll,  or  head. 

Taxes  on  property  were  to  be  found  in  all  the  colonies  at 
one  time  or  another,  and  were  employed  by  the  New  Eng- 
land colonies  either  with  or  without  other  taxes,  contin- 
uously. The  collective  mass  of  property  was  frequently  the 
basis  for  the  estimate  of  each  one's  share,  though  certain 


no 


TAXATION  AS  IT  IS. 


1 


abjects  were  often  exempt,  and  sometimes  specific  objects 
were  named  as  alone  subject  to  taxation.  The  people  of 
New  Netherlands,  complaining  of  their  burdens,  were 
pointed  by  the  secretary  of  the  Council  to  New  England, 
where  everj'lhing  was  taxed,  and  were  reminded  that  they 
themselves  suffered  only  from  an  excise  tax  on  beer  and 
wine  and  from  duties  on  a  few  imports  and  exports.'  A  few 
years  later,  1653,  however,  these  same  people  were  com- 
plaining of  the  following  taxes :  chimney  and  head  money ; 
a  tithe  of  all  grain,  flax,  hemp,  and  tobacco ;  a  tithe  of  all 
butter  and  cheese ;  and  excessive  export  duties.  But  in- 
equalities arose  from  the  taxation  of  visible  property  alone, 
and  to  equalize  the  burdens,  the  estimated  incomes  of  cer- 
tain classes,  as  merchants,  agents,  etc.,  were  taxed.  These 
two  taxes  were  not  infrequently  employed  together,  tlie  one 
supplementing  the  other.  While  the  former  were  laid  ac- 
cording to  a  uniform  rule  of  valuation,  it  was  left  to  the 
assessor  to  estimate  incomes. 

The  early  history  of  Springfield,  Mass.,  illustrates  in  an  in- 
teresting manner  many  of  the  features  of  colonial  finance. 
Taxes  were  laid  in  proportion  to  the  number  of  acres 
which  each  one  held,  until  1655,  and  those  without  land 
or  cattle  escaped  altogether.  After  1655,  land,  houses,  and 
stock  were  valued,  and  every  person  not  dependent  was 
assessed  five  shillings  for  the  support  of  the  minister.  It 
was  ordered  in  r66t  that  "men  shall  be  assessed  for  their 
merchandizing  and  trading  sutable  to  trade  they  drive  in 

'  The  secretary  very  skilfully  explains  the  workings  of  tliese  i 
diced  taxes.     He  shows  that  il  is  not  the  vintaers  who  pay  the  e»ci 
lax  on  beet  and  wine,  but  Ihose  who  daily  resort  lo  thdr  houses,  and 
the  traveller  from  New  England.  Virginia,  and  elsewhere.     The  high 
prices  of  imported  goods  be  ascribes  to  the  greed  of  traders,  ai 
lu  the  duties. 


I 


COLONIAL   TAXATION. 


Ill 


the  towne,  each  also  is  to  be  judged  by' the  selectmen."  It 
was  further  ordered  in  1661  that  all  men  of  sixteen  and 
over,  save  sick,  and  infirm,  should  be  valued  at  £,\  2,  £,\fi,  or 
j£io,  at  the  discretion  of  the  st--Iectmen.  Weahh  appeare 
to  have  increased,  and  in  1672  there  were  one  hundred  and 
seventy  voters  who  were  valued  at  over  ^20. 

The  selectmen  were  not  "accounted  dischai;ged  of  their 
trust "  until  ihey  had  paid  all  the  debts  of  the  town,  but 
they  could  levy  a  special  tax  therefor,  if  necessary.  The 
acceptance  of  the  office  of  selectman  was  compulsory,  and 
in  1670  it  was  provided  that  (he  selectmen  should  be  fur- 
nished a  dinner  at  public  expense  when  they  met  for  town 
business.  This  was  the  first  time  that  they  were  remunera- 
ted for  their  services. 

Among  the  tines  which  yielded  revenue  may  be  noticed 
those  for  the  violation  of  the  sumptuary  laws.  In  1667, 
Mary  Siebbins  was  fined  ten  shillings  for  wearing  silks  con- 
trary to  law,  and  sixty-eight  persons  were  accused  of  indul- 
gence In  forbidden  luxuries.  A  heavy  fine  of  a  different 
nature  was  imposed  on  Nathaniel  Ely,  inn-keeper,  in  1674, 
because  his  beer  was  not  made  according  to  law.' 

Tlie  poll  tax  was,  like  the  property  tax,  employed  by  all 
the  colonies  at  one  period  or  another.  It  was  the  only 
direct  tax  levied  In  Virginia  for  years.  Although  it  was 
in  1645  termed  inconvenient  and  insupportable  for  the 
poorer  classes,  and  all  taxes  placed  on  visible  estates,  it 
was  revived  in  1649,  and  was  continued  until  1663,  when 
a  land  tax  was  decided  to  be  most  equitable.      Very  few 

>  The  valuable  e*uy  by  Dr.  E.  W.  Bemis,  entitled  ■'  Old  Time 
«wer«  tu  Picsenl  Frobiemi,  as  Illustrated  by  (he  Early  L^islation  of 
Springfield,"  is  authority  for  sfalemcnis  in  Ihi*  patiigraph.    The  c 
was  based  on  a  study  of  original  archives,  and  was  puljlished  in 
Nm  EitgUHdir  for  Frbiuiiry,  1887. 


112 


TAXATION  AS  IT  IS 


were  exempt.  Marjland  had,  before  the  Revolution,  prac- 
tically no  other  direct  tax.  All  free  men,  free  women,  and 
children  over  twelve  years  of  age  were  included  in  the 
levy.  This  tax  became,  to  tlie  people  of  tliis  colony,  most 
unpopular,  and  that  for  principal  reasons.  It  was  felt  they 
were  not  fair  because  not  in  proportion  to  ability  as  meas- 
ured by  property,  and  it  was  difficult  to  make  the  payments, 
because,  while  hemp,  flax,  or  other  produce,  or  paper  money 
might  serve  as  legal  tender  for  other  debts,  the  poll  tax 
must  be  paid  in  tobacco,  a  given  number  of  pounds  per 
poll,  the  value  of  which  was  increased  at  times,  by  a 
designed  diminution  of  the  supply.  The  tax  became  ex- 
tremely burtlensome,  and  was  in  1777  declared  "grievous 
and  oppreciive."  In  other  colonies  this  tax  seems  to  have 
always  accompanied  other  taxes. 

c^rr-RENT5, 
Quit-rents  were  annual  charges  on  lands  in  the  colonies 
under  proprietary  government,  and  were  to  be  found,  to  a 
slight  extent,  in  others.  These,  in  some  cases,  were  suffi- 
cient to  cover  both  dues  to  the  proprietor!  and  all  public 
expenses.  Lands  in  colonies  non- proprietary  were  appor- 
tioned among  the  members  of  the  colonizing  companies, 
according  to  the  amount  of  stock  held,  or  among  non- 
stockholders for  certain  services  rendered.  In  later  set- 
tlements, the  amount  of  one's  ratable  property  was  made 
the  basis  of  apportionment.     Lands  were  seldom  sold.' 


Fees  were  a  common  source  of  revenue,  and  were  gener- 
ally applied  to  the  support  of  public  ofHciab.     The  minister 

'  "  The  Ljmd  Syatem  of  the  New  England  Coloniei,"  Melville  Egle- 
■ton,  page  39. 


I 


COLONIAL    TAXATION.  113 

received  fees  for  manying,  for  christening,  churching,  and 
burying;  the  clerk  for  issuing  court-papeis  and  making 
records;  the  sheriff  for  making  arrests  and  inflicting  pun- 
ishment ;  and  so  with  other  officers. 

Licenses  and  fines  also  yielded  considerable  revenue. 
Liquor  and  marriage  licenses,  and  those  imposed  on 
pedlers  and  lawyers  were  most  common.' 

OTHER  TAXES. 

Many  singular  objects  of  taxation  appear  in  the  lists  of 
some  of  the  colonies.  In  Virginia,  there  was  a  window 
tax;  in  Maryland,  a  tax  on  bachelors  above  twenty-five 
yeaiB  of  age ;'  in  New  York,  a  tax  on  wigs ;  not  to  men- 
tion others  equally  odd. 


Lotteries  were  not  an  uncommon  device  for  raising 
money,  especially  in  the  later  days  of  the  colonies  when 
burdens  became  heavier.  Mention  of  them  is  made  in 
the  Rhode  Island  records  as  being  employed  for  such 
public  purposes  as  buikling  and  repairing  forts,  court- 
houses, market -ho  uses,  and  even  churches.  A  lottery  was 
established  in  Maryland  in  1768  for  the  purpose  of  rais- 
ing money  to  support  an  agent  to  be  sent  to  England  to 
present  to  the  king  the  grievances  of  the  people.  Penn- 
sylvania raised  money  by  this  means  for  certain  public 
improvements ;  Virginia,  for  defence  in  the  French  and 
Indian  War,  and    also    for  building    schools,   academies, 

I  A  part  of  the  lax  on  pedlers  in  Virginia,  together  with  the  reve- 
noe  &om  impoit  dulin  on  liquors,  wu  paid  lu  the  visiting  cummiltee 
of  Willi»m  >nd  Mary's  ColUge  (or  the  support  of  professors. 

'  "  l.evied  according  to  their  ptopetty,  one  hundred  per  cent  lo  be 
added  in  case  of  papisls."  —  Stharf. 


114  TAXATION  AS  IT  IS. 

churches,  etc. ;  Connecticut,  for  erecting  buildings  for 
Yale  College ;  and  other  colonies  were  doubtless  no  less 
backward  in  their  use.'  "  It  was  with  the  money  col- 
lected from  the  sale  of  lottery  tickets,"  says  McMaster, 
"  that  Massachusetts  encouraged  cotton  spinning,  and  paid 
the  salaries  of  many  of  her  officers;  that  the  city  hall 
was  enlarged  at  New  York;  that  the  court-house  was 
built  at  Elizabeth;  that  the  library  was  increased  at  Har- 
vard; and  that  many  of  the  most  pretentious  buildings 
were  put  up  at  the  federal  city,"*  The  Continental  Con- 
gress in  1777  established  lotteries  to  raise  funds  for  carry- 
ing on  the  war,  and  sent  agents  into  all  the  states  to  sell 
tickets. 

DUTIES. 

Excise  duties  were  laid  in  most,  if  not  all,  of  the  colonies 
on  the  manufacture  of  liquor.  Duties  on  exports  and  im- 
ports were  also  laid,  but  without  regularity,  or  regard  for  the 
interests  of  the  colonies  as  a  whole.  One  colony,  for 
instance,  taxed  rum  coming  from  a  neighboring  colony,  but 
admitted  the  foreign  article  free  of  duty.  Export  duties  were 
laid  on  but  few  articles.  The  object  seems  to  have  been 
merely  revenue,'  bounties  being  sometimes  granted  for  the 
encouragement  of  industries.     Some  of  the  colonies  enjoyed 

'  Money  was  raised  for  Columbia  College,  in  the  middle  of  (he  iMl 
century,  by  an  aulhorizcd  lottery.  Vincennes  Universily,  Indiana,  re- 
ceived profits  from  a  lullcry  in  this  century.  McMaster  gives  a  list  of 
no  less  than  twenty  lotteries  id  operation  in  the  various  states  daring 
the  years  1788-91. 

s  McMastct,  "  History  of  the  American  People,"  Volume  I.,  page  588. 

*  Pennsylvania,  at  the  close  of  the  Revolution,  for  the  purpose  of 
protection  and  encouragement  of  home  industries,  laid  an  import  duty 
on  no  less  than  a  hundred  articles,  including  products,  manufactures, 
■nd  raw  material. 


COLONIAL    TAXATION. 


115 


considerable  revenues  from  these  duties.  Duties  on  tonnage 
of  vessels,  usually  |)ayable  in  powder  and  shot,  were  col- 
lected at  the  ports  and  applied  to  Ihe  maintenance  of  fortifi- 
cations. Other  revenues  were  applied  to  payment  of  the 
general  expenses  of  the  colony. 

Taxes  were  as  a  rule  collected  "  in  kind,"  the  Assembly    , 
or  Ihe  General  Court  naming  the  price  at  which  the  various 
commodities  should  be  received. 

The  systems  of  taxation  in  colonial  days  were  still  contin- 
ued without  change  by  some  of  the  colonies  when  they 
became  states,  and  will  be  noticed  in  greater  detail  in  the 
follosving  chapter,  which  treats  of  taxation  in  the  various 
states  at  the  dose  of  the  century. 


CHAPTER  lU 


TAXATION    IN    1798, 

THE  provisions  of  the  laws  of  the  various  states  in 
1796,  touching  taxation,  present  a  great  diversity, 
both  as  to  the  objects  and  principles  of  taxation  and  as  to 
the  methods  of  apportionment  and  collection  of  taxes.  So 
different  were  the  systems  in  operation  in  the  various  states 
that  the  Secretary  of  the  Treasury,  Mr.  Oliver  Wolcolt,  who 
had  been  directed  by  Congress  to  prepare  a  plan  for  layiDg 
and  collecting  federal  taxes,  declared  in  his  report  that  they 
were  "  utterly  discorilant  and  irreconcilable  in  llieir  original 
principles,"  and  could  not  be  adopted  as  a  means  for  the 
just  apportionment  and  prompt  collection  of  a  general  tax. 
In  seven  states,  for  example,  there  was  a  uniform  capitation 
tax,  which  was  unknown  in  the  others.  In  some,  all  prop- 
erty, with  a  few  exceptions,  was  taxed ;  in  others,  specific 
objects  were  named.  Land  was  taxed  in  one  state  accord- 
ing to  quantity,  in  another  according  to  quaUty,  and  in  a 
third  not  at  all.  Responsibility  for  the  assessment  and  col- 
lection of  taxes  in  some  cases  attached  to  the  state  itself; 
in  others,  to  the  counties  or  townships. 

Such  diversity  where  uniformity  would  be  prescribed  by 
the  fundamental  principles  of  taxation  may  be  regarded  as 

•  The  sathority  for  Ihe  greater  put!  of  Ibe  malice  contained  in  Ihis 
ch&pter  ii  the  report  msde  by  Mr  Oliver  Wolcotl,  Secretary  of  the 
United  State*  Treaiury,  concerning  laialion  in  Ihe  various  UalH  of 
the  Union.    See  "American  State  ['■pen,"  Finance,  Volume  I. 


TAXATION  IN  ijgi. 


117 


evidence  of  the  faultiness  of  most,  if  not  all,  of  these  sys- 
tems, and  yet  little  dissatisfaction  seems  to  have  been  mani- 
fested in  any  of  the  states.  Explanation  of  the  apparent 
efficiency  of  all  these  methods  is  doubtless  to  be  found  in 
the  fact  that  the  taxes  were  not  sufficiently  heavy  to  really 
test  them  and  discover  their  weak  points.  How  burden- 
some the  county  and  township  taxes  were  at  this  time  has 
not  been  ascertained,  but  those  imposed  by  the  states  were 
comparatively  light.  The  average  annual  expenditure  of 
each  of  the  fifteen  states  enumerated  for  the  support  of 
civil  government  was  less  than  ^70,000;  the  total,  about 
51,000,000.'  To  meet  this  expenditure  many  had  revenues 
from  other  sources  than  direct  taxes,  and  a  few  had  a  suffi- 
cient amount  to  free  them  from  the  necessity  of  levying  any 
considerable  direct  taxes,  while  New  York,  Pennsylvania, 
and  Maryland  for  years  levied  no  direct  lax  whatever  for 
state  purposes.  It  is  not,  then,  at  all  strange  that  machin- 
ery which  would  now  be  regarded  as  somewhat  slow,  clumsy, 
and  inefficient,  should  at  that  time  have  performed  satisfac- 
torily the  small  amount  of  work  demanded  of  it. 

It  shall  be  the  object  of  this  chapter  to  present  briefly  the 
distinguishing  features  of  these  various  systems.' 

THE  OBJECTS  AND   PRINCIPLES  OF  TAXA'HON   IN    1 796. 

The  objects  and  principles  of  taxation  will  first  be  noticed. 
In  the  following  table  are  presented  some  of  the  objects  of 

'  Tbe  pre*cnl  total  eipendilum  of  these  tame  states  is  (65,000,000. 

*  Atyitem  of  taxalion  was  inaugurnl&l  in  Tennessee  in  1796,  of 
which  Wolcott  gives  no  accoanl.     The  fallowing  provisions  ate  found 

the  constitution  of  1796:  "All  lands  are  liable  to  Iw  tued,  and  they 
ihall  be  taxed  uniformly,  «o  Ihal  no  100  acres  sliall  tjc  taxed  higher 
than  another,  excepl  town  lols.  No  freeman  shall  be  taxed  highet 
than  100  acres  of  land,  and  no  slave  higher  than  KiO  acres.  No  arlicle 
uf  luaniifaclure  ah.ill  lie  laied  extej)!  to  yvj  expenses  of  inspection." 


1          m 

^M       lis                           TAXATtOKf  AS  IT  IS.                                              ^H 

^m       taxation  common  to  the  lists  of  two  or  more  states.     The         ^H 

^1       mark  in  the  space  opposite  the  name  indicates  that  Ihc        ^^| 

^1       object  named  at  the  head  of  the  column  is  taxed  in  thai        ^^| 

H                                                                ^1 

i 

8 

1-^ 

1 

s 

s 

1 

3 

^1                  STATES. 

I 

ft 

I 

u 

t 

i 

i 

E 

z 

f 

\ 

i 

i 

'i 

It 

i 

a 

i 

i 

i 

i 

li 

1 

^H      Vekmont 

X 

X 

X 

X 

^V     New  Hamfshire 

X 

X 

X 

X 

X 

X 

^V      Massacmusetts  . 

X 

X 

X 

X 

X 

X 

^B        Rh»1)E  Island  . 

X 

X 

X 

X 

^1           CONNECTiaiT     .    . 

X 

X 

X 

X(' 

- 

xw 

^ 

- 

X 

- 

H       New  Yokk   .  .  . 

X 

X 

H       New  Jersey  .  .  . 

X 

X 

X 

X 

X 

^H      Pennsylvania    . 

X 

X 

X 

X 

X 

^H       Delaware    .  .  . 

XC) 

X(.) 

^H_       MAKVLANI).    ,    .   . 

X 

X 

X 

X 

X 

^B        VlHUINlA 

X 

X"' 

X 

X 

X 

X 

X 

^V      Kentucky  .... 

X 

X 

X 

X 

X 

X 

^H        Ndktm  Cakolina 

X 

X 

X't> 

X 

X 

X 

^1        South  Carolina 

X 

X 

X 

^H       Gkorgia 

^ 

X 

^ 

^ 

X 

X 

H              (>)Aiuiti>Iiu»i»h»n.               (^E«xpil<»niuiht>uieacU»ledS<«».              ^| 

H              (0  -I-bu  i.,  dl  pr„pc[.y,  .i.h  ccui,.  »«.p»»»^.                                                              ^1 

^f            From  a  glance  at  the  above  table  it  is  plainly  evident  that          ^H 

H        the  New  England  states  followed  one  and  the  same  copy,          ^^k 

^^       though  with  difTerent  degrees  of  accuracy.     The  Southern          ^H 

L       1 

TAXATION  m  lyqt.  119 

and  peculiar  to  themselves;  and  the  Middle  states,  while 
showing  no  striking  resemblance  to  one  another,  were  siill 
less  like  either  of  the  other  groups.  But  while  a  general 
likeness  obtained  between  the  members  of  these  three 
groups  of  states,  there  was  naturally  a  considcralsle  diversity 
in  minor  points.  The  people  of  one  slate  were  further 
removed  from  those  of  a  neighboring  state  than  they  are 
to-day,  and  though  both  may  have  started  as  colonies  with 
the  same  system  of  taxation,  it  is  not  strange  that  they 
Bbould  have  grown  apart. 

TAXES  as   LAND, 

Before  looking  at  other  peculiarities,  it  will  be  interesting 
to  note  the  varieties  of  the  land  tax,  which  tax  it  will  be 
seen  by  reference  to  the  table  was  common  to  all  the  states 
with  one  exception.  In  Vermont  all  lands  which  had  been 
improved  two  years  and  were  within  enclosure,  and  in  North 
Carolina  all  lands,  excepting  tou'n  loLs,  which  were  assessed 
according  to  valuation,  were  taxed  uniformly  according  lo 
quantity.  Jn  Rhode  Island  and  New  York  lands,  together 
with  all  other  property,  real  and  personal,  were  taxed  ac- 
cording to  estimated  valuation.  They  were  assessed  in  Mas- 
sachusetts and  New  Hampshire  according  to  their  products 
or  supposed  annual  rents.  A  peculiarity  of  this  tax  in  the 
}atter  state  was  the  arbitrary  and  variable  size  of  the  acre. 
It  was  not  a  certain  number  of  square  rods,  but  was  a  sufB- 
cient  quantity  of  orchard  land  to  produce  ten  barrels  of  cider. 
Or  of  arable  land  to  produce  twenty-five  bushels  of  Indian 
.com,  or  of  mowing  land  to  produce  a  ton  of  hay.  A  quan- 
tity of  land  sufficient  to  support  a  cow  one  year  was  re- 
igarded  as  four  acres.  In  Connecticut  no  regard  was  had 
:(6r  the  value  of  lands  in  their  assessment,  but  all  were 
Bssessed  uniformly,  according  to  the  mode  of  cultivation  or 


120  TAXATION  AS  IT  IS. 

condition,  each  kind  being  put  in  the  list  at  a  fixed  rate ; 
as  for  example,  meadow  lands  at  fi.^o  per  acre.  Taxes 
were  levied  on  land  in  Pennsylvania'  according  to  a  triennial 
valuation,  in  Virginia  according  to  a  permanent  valuation. 
The  average  or  relative  value  of  lands  in  different  counties 
or  districts  was  fixed  by  law  in  Maryland  and  New  Jersey, 
and  this  average  value  multiplied  by  the  number  of  acres 
therein  became  the  basis  of  taxation.  Within  the  counties 
or  districts,  lands  contributed  to  the  total  sums  assessed 
to  them  in  proportion  lo  their  value.  Lands  in  Kentucky, 
except  town  lots,  were  divided  into  three  classes,'  according 
to  quality,  and  in  South  Carolina  and  Georgia  were  taxed 
uniformly  by  districts  or  classes,  whether  cultivated  or  not.* 
Delaware  had  no  direct  tax  on  land,  but  a  lax  was  levied  on 
the  income  from  land  in  the  general  income  tax.' 

OTHER   PECUUAXrnES   IN  THE  VARIOUS   TAX   SYSTEMS. 

In  Vermont  all  taxes  were  imposed  in  proportion  lo  a 
general  list  of  ratable  objects  with  fixed  valuations.  A  lax 
on  lawyers,  traders,  and  owners  of  mills,  proportioned  to 
their  prolits,  might  be  added  at  the  discretion  of  the  assess- 
ors ;  the  planting  of  orchards  was  encouraged  by  an  exemp- 
tion from  taxation  for  ten  years. 

'  Lands  granled  lo  any  afficer  or  soldier  of  Ihe  line  were  free  from 
lax  during  occupancy. 

'  The  Rrat  wu  (axed  tt  halt  ■  dullu  per  hundred  acres;  the  second, 
■(  one.louctli  of  a  doiluj  and  the  third,  at  une-eiglith  of  a  dollar  per 
hundred  acres. 

•  For  example,  in  South  Carolina  all  lide-svramps  not  generally  af- 
fected by  the  sails  oi  freshes,  uf  ihe  fitsl  quality,  were  rated  at  lix  pounds 
per  acre;  in  Georgia  at  I10.39  per  acre. 

*  Provision  wns  made  in  (his  same  year  for  a  change  in  ihe  syslein 
of  taxaiiun,  and  land  vtat  thereafiec  to  be  taxed  according  lo  valuaEioa, 


TAXATIOM  m  ijgd.  121 

New  Hampshire'!;  list  was  somewhat  longer,  and  was 
required  to  be  revised  ai  least  once  in  five  years.  All  stock 
and  property  of  men  employed  in  trades,  s&  well  as  the 
stock  of  merchants  and  traders,  were  taxed.  Mills,  wharves, 
and  ferries  were  rated  at  a  twelfth  of  their  net  income. 

On  the  long  and  detailed  list  of  Massachusetts,  in  addition 
to  objects  named  above,  were  shops,  mills,  industrial  works, 
buildings  of  all  kinds  of  five  pounds  and  upwards,  the  ton- 
nage of  vessels,  government  securities,  stock  in  bank,  and 
plate. 

All  property,  real  and  personal,  was  subject  to  taxation  in 
Rhode  Island,  New  York,  and  Maryland,  though  under  differ- 
ent regulations  and  with  different  exemptions.  In  Rhode 
Island  household  furniture,  farming  utensils,  and  one-fourth 
of  property  taken  at  sea  were  exempted.'  In  New  York,  as 
has  already  been  noted,  no  taxes  for  state  purposes  had 
been  levied  for  some  years,  since  1 788,  and  no  objects  or 
principles  of  taxation  were  prescribed  ;  but  all  assessments, 
whether  state,  county,  or  township,  were  determined  by  the 
"  discretionary  estimates  of  the  collective  and  relative  wealth 
of  corporations  and  individuals."  Maryland  exempted  such 
property  as  belonged  to  the  state  or  the  United  Slates, 
houses  for  public  worship,  burying-grounds,  such  property  as 
belonged  to  county,  college,  or  county  school ;  the  produce 
of  land  in  the  hands  of  the  producer,  provisions  for  the  year, 
plantation  utensils,  working  tools  of  mechanics  and  manufac- 
turers, wearing  apparel,  imported  goods,  home-made  manu- 
factures in  tlie  hands  of  the  manufacturer,  stills,  and  ready 
money.  In  this  state  certain  specific  taxes  were  also  col- 
lected, viz. :  of  every  attorney  for  admission  to  the  bar,  and 


'  Providence,  by  n  vote  of  i 
in  retpect  to  (hat  luvvn,  estates 


i  inhabilants.  hai)  ftbolUbed  the  poll  tl 
jnly  being  taxable. 


122  TAXATION  AS  IT  IS. 

an  annual  sum  thereafter  during  practice ;  on  licenses  to  sell 
liquor,  to  keep  tavern,  and  to  get  married. 

The  profits  of  any  and  all  lucrative  professions,  trades,  and 
occupations,  except  compensation  to  public  office  and  the 
profits  of  husbandry  and  common  labor  for  hire,  might  be 
taxed  in  Connecticut.  Such  a  tax  on  trades  and  professions 
might,  at  the  discretion  of  the  assessor,  be  assessed  in  Penn- 
sylvania, exemptions  being  granted  in  favor  of  ministers, 
mechanics,  manufacturers,  and  schoolmaster;  and  also  in 
South  Carolina,  those  exempted  being  the  same  as  in 
Pennsylvania,  excepting  manufacturers. 

Pennsylvania  and  New  Jersey  were  alike  in  having  certain 
personal  taxes :  the  former  levied  a  tax  on  all  freemen  over 
twenty-one  years  of  age  ;  the  latter,  on  shop-keepers,  single 
men  who  kept  horses,  and  single  men  who  did  not  keep 
horses.  Taxes  on  furnaces,  mills,  ferries,  and  industrial 
works  of  various  kinds  were  also  common  to  the  two. 

Delaware  alone  had  a  general  income  tax,  and  this  was 
levied  on  income  from  all  sources,  uncultivated  land,  persons 
under  twenty-one  years  of  age  and  apprentices  excepted. 
This  system  seems  to  have  occasioned  inconvenience  and 
inequality,  and  a  new  plan  was  adopted  in  1 796  ;  but  mer- 
chants, traders,  mechanics,  and  manufacturers  were  still  to 
be  assessed  according  to  their  gains. 

A  special  tax  was  placed  on  ordinaries  and  houses  fot 
retailing  liquors  in  North  Carolina ;  in  South  Carolina,  on 
sales  at  auction,  and  a  double  tax  on  the  property  of  per- 
sons who  resided  out  of  the  state,  except  of  jiersons  in  the 
employ  of  the  state  or  of  the  United  States  and  of  young 
men  sent  abroad  for  education,  until  the  age  of  twenty-three. 

Georgia  placed  a  tax  on  foreign  wares,  liquors,  and  mer- 
chandise, sold,  bargained,  or  trafficked  for ;  on  the  fiinded 
debt  of  the  United  Stales ;  on  all  negroes  brought  into  the 


TAXA  TION  m  ijga.  123 

State  by  sea  for  settlement  or  sale,  except  such  as  are 
brought  in  from  any  part  of  the  United  Slates ;  on  all  pro- 
fessors of  law  and  physic  ;  and  on  all  factors  and  brokers. 

Exemptions  from  poll  tax  were  generally  granted  in  favor 
of  ministers  of  the  Christian  religion,  presidents,  professors, 
and  students  of  colleges,  and  of  the  infirm  and  indigent. 

Maryland,  in  1776,  declared  that  the  levying  of  taxes  by 
the  poll  was  "grievous  and  oppressive,"  and  ought  to  be 
abolished ;  and  that  paupers  ought  not  to  be  assessed  for 
the  support  of  government,  but  that  every  other  person  ought 
to  contribute  according  to  his  actual  worth  in  real  and  per- 
sonal property.  The  property  of  seminaries  of  learning,  houses 
of  public  worship,  and  ail  lands  employed  for  schools  and 
other  public  pious  and  charitable  purposes,  were  also  gen- 
erally exempted  from  taxation  in  the  various  states. 

The  general  characteristics  of  taxation  in  the  states  in 
1796,  it  will  be  noticed,  were,  first,  that  specific  objects 
were  usually  selected  for  taxation,  rather  than  all  property  j 
second,  that  visible  property  bore  all,  or  nearly  ail,  tlie 
burden;  and  third,  that  taxes  were  usually  laid  according 
to  some  fixed  and  arbitrary  rule  of  valuation,  rather  than 
according  to  the  selling  value  of  the  objects  taxed. 


APPORTIONMENT  AND   COLLECHON   OF  TAXES. 

The  various  methods  and  means  of  apportionment  and 
collection  of  taxes  are  next  to  be  noticed.  South  of  Dela- 
ware, all  state  taxes  were  laid  directly  on  persons  or  the 
property  of  individuals  by  the  state,  while  in  slates  north 
of  Delaware  they  were  assessed  lo  corporations  or  districts, 
r  townships.'     In  the  former,  the  assessing  and 

B  Norlhetn  stales  aie  slill  apportioned  among  ihc  local 
Taxes  in  the  Soutbetn  sUles  are  still  peiuenlage  taxes. 


TAXATION  AS  IT  fS. 


ttJRtaiag  officen  wen  appointed  by  the  state  esectitive,  Vjf 
the  stale  legislature,  by  the  courts,  or  by  oflicials  receiving 
iheii  commissions  from  the  state ;  in  the  latter,  they  were 
cfaosen  by  the  people,  who  were  held  responsible  tor  their 
conduct  In  the  state  of  Delaware  the  mean  between  the 
two  was  observed  ;  the  taxes  were  apportioned  to  the  peo- 
ple of  the  counties,  Init  the  counties  were  not  held  responsible 
for  their  collection.  The  following  table  indicates  the  vari- 
ous methods  of  appointment.  Marks  made  in  the  upper 
•paces  opposite  the  names  of  the  sutes  refer 
in  the  Itnrcr,  to  collectors. 


L 


AStifSM^lST  OF  TAXfS. 

!n  the  New  England  states,  New  York,  and  New  Jersey, 
tittets  or  assessors  were  chosen  in  the  annual  town  meetings. 
1*he  seicctmen  were  the  assessors  in  New  Hampshire,  and  in 
Masuchusetts  acted  as  such  when  assessors  were  not  elected. 
To  these  officen  the  inhabitants  of  the  various  towns  were 
Rquired  to  return  annually,  under  oath,  always  under  pen- 
«hy  of  increased  assessment  or  fine  for  omission  or  conceal- 
ment, B  list  of  the  ratable  property  in  their  possession.  The 
duties  of  the  asscsson  in  Vermont,  Connecticul,  and  New 
Vork  ended  when  the  aggregate  lists  had  been  returned  to 
the  pn>l»er  state  or  count}-  authorities.  In  Vertoont  the 
selectmen,  and  in  New  York  the  supervisors,  then  made  the 
apponionment.  while  in  Connecticut  the  collectors  were 
directed  to  collcirt  certain  sums,  a  poundage  rate  on  the  lists 
trtunied  by  the  asiessots.  But  in  the  other  states  belong- 
ing to  this  group,  the  assessors  were    further  required    to 

In  tbc  state  treamy.    Coanty  ukd  locd  <Ad*b  m  ia  Ibe  Soaih  M**Ily 
iUnMti  vitb  tbe  aMettion  of  taxes. 


I 


^^^^^^■^^H 

V                                         TAXA  T/O.V  IN  ,796.                                                ^H 

1 

I 

i 

I 

1 

i 

B    Vbumokt  

" 

^B  Nbw  Haupshike 

X 
X 

^M  Massachvsbtts 

X 

^KKmodk  Island 

X 
X 

Bo««Kr.™T 

X 

B   New  Vork 

X 
X 

B   Niw  Jersey 

X 

^H  PlNHSVLVAHIA 

^ 

j( 

^VDelawakb 

X 

X 

B:»I*RVi^Nn 

X 
X 

^^VlkOlNIA 

y 

^ 

^1  Kkntockv 

^ 

^ 

^V  MotTH  CAROLINA 

X 
X 

^BSOVTK  CAROUnA 

X 

H 

X 

^K 

L          J 

TilX^  TION  AS  IT  IS. 


apportion  the  quotas  of  state  and  county  tax,  together  with 
the  township  tax,  among  the  inhabitants  of  their  respective 
towns  according  to  prescribed  rules  of  assessment.  Rhode 
Island  was  peculiar  in  having  a  state  committee  of  assess- 
ors, somewhat  like  the  modem  board  of  equalization, 
which  went  about  from  town  to  town,  summoning  the  local 
assessors  of  each  to  appear  before  it  with  their  lists,  and  was 
empowered  to  fix,  on  the  best  information  to  be  obtained, 
the  quota  for  each.  Provision  was  generally  made  in  these 
slates  for  hearing  the  grievances  of  individuab  who  felt  un- 
justly assessed,  and  power  was  given  the  body  constituted  for 
that  purpose  to  reduce  or  entirely  abate  taxes,  in  cases  where 
such  a  course  seemed  equitable. 

A  general  assessment  was  made  in  Pennsylvania  triennially, 
and  served  as  a  basis  for  valuation.  The  officers  of  assess- 
ment were  county  commissioners,  chosen  by  the  people,  and 
holding  office  for  three  years.  The  lists  of  the 
were  subject  to  the  alteration  and  revision  of  the 
sioners,  though  the  relative  value  in  the  townships  might  not 
be  changed.  The  commissioners  also  sat  as  a  court  of 
appeal  in  tax  cases. 

The  counties  of  Delaware  were  divided  into  hundreds, 
and  in  each  hundred  an  assessor  was  annually  chosen.  lasts 
of  all  taxable  persons  were  furnished  the  assessors  by  the 
constables  of  the  hundreds,  and  opposite  the  name  of  eacti 
inhabitant  the  assessors,  in  a  general  meeting  of  the  county, 
placed  his  supposed  income.  These  lists  thus  completed 
were  published  in  the  various  hundreds,  and  notice  also  given 
of  the  holding  of  the  levy  court  and  court  of  appeals  for 
the  county,  before  which  complaints  of  excessive  and  unjust 
assessment  might  be  made. 

The  legislature  of  Maryland  appointed  for  each  county 
and  Baltimore  town,  live  commissioners  of  the  tax.    These 


I 
I 

J 


TAXATION  IN  rjgd. 


127 


commissioners  divided  their  respective  counties  into  con- 
venient districts  and  appointed  in  each  an  assessor  who 
must  be  worth  ^200.  The  assessors  were  to  inform  them- 
selves by  all  lawrul  means  of  the  property  in  their  districts, 
and  to  make  returns  to  the  commissioners,  who  sat  as  a 
court  of  appeal. 

The  annual  assessment  was  made  in  Virginia  by  commis- 
sioners of  revenue,  appointed  by  county  and  corporation 
courts,  sheriffs  and  collectors  who  had  not  settled  their 
accounts  being  ineligible.  They  received  from  the  com- 
missioners of  the  previous  year  the  boolcs,  with  the  perma- 
nent valuation  of  lands,  in  which  were  noted  all  alterations, 
alienations,  divisions,  and  additions.  Lists  of  ratable  per- 
sonal property  were  to  be  returned  at  a  certain  time  to  these 
omissioners,  who  made  an  abstract  of  all  property,  real 
and  personal,  and  returned  the  same  to  the  collector  or 
BherifT.  The  permanent  valuation  was  made  in  1781  by 
three  commissioners  from  each  county,  appointed  by  the 
justices.  But  as  these  commissioners  were  independent  of 
one  another,  there  were  many  inequalities  in  the  valuations 
of  the  several  counties.  For  this  reason  the  counties  were 
arranged  in  four  districts,  reference  being  had  to  soil  and 
tituation.  To  effect  this  equalization,  two  commissioners 
were  appointed  in  1781,  and  the  valuation  thus  equalized 
became  the  basis  for  future  assessments. 

The  county  courts  divided  the  counties  of  Kentucky  into 
districts,  and  appointed  a  commissioner  for  each.  By  the 
commissioners  the  class  to  which  land  belonged  was  deter- 
mined, lists  of  ratable  objects  collected,  and  returns  made 
to  their  respective  county  courts,  which  had  power  to  cor- 
rect mistakes  and  relieve  grievances. 
K  In  North  Carolina  the  justices  of  the  peace  were  appointed 
^B  by  the  county  couns  to  receive  returns  of  taxables  in  each 


m  TAXATION  AS  IT  IS. 

dintrict.  They  were  usually  aided  by  the  captains  of  militia,  I 
who  advertised  musters,  to  which  the  people  came  with  writ- 
ten ligts  of  their  property.  These  returns  were  exhibited  by  < 
the  Ju»Uceii  to  ihc  comity  court,  together  with  the  names  of  I 
thone  who  hail  failed  to  comply.  The  valuation  of  town  . 
proiwrty  was  mndc  by  three  freeholders,  appointed  annually 
in  each  town  by  the  county  court. 

The  luseasors  and  collectors  were  the  same  persons  in 
South  Carolina,  and  were  appointed  by  the  legislature. 
They  determined  the  cl.iss  to  which  lands  belonged,  re- 
ceived lixtH  of  mlnlile  pereonal  property,  and  made  assess- 
ment on  business  a.n<\  income.  The  lists,  when  completed, 
were  cxiKwcd  in  the  parish  in  a.  public  place  for  ten  days, 
during  which  period  the  taxes  must  be  paid. 

A  receiver  of  tax  returns  was  appointed  in  Georgia  for 
every  county  by  tlic  Icgisl.iture.  The  receivers  were  required 
to  |[i\T  notice  to  each  captain's  district  of  the  times  and 
plftccs  at  which  they  would  recei\-e  tax  returns.  They  were 
to  be  furnished  by  the  commanding  officer  of  each  company 
with  lists  of  persons  liable  to  taxes,  and  were  to  attend  at 
least  three  daji  in  each  district. 

cotx«rnoN  or  taxes. 
The  coltrctofs,  like  the  assessots,  in  New  Engbnd,  New 
Viwk.  and  New  Jersey,  were  elected  aiuukilly  is  the  town 
(netting  by  ^  people.'  In  Itrnnsytvanta  they  were 
J4>|>i«)nte*l  by  cvMumissioners  elected  tn'  the  people;  in 
Marrbml.  by  commi^^sioneis  appotatcd  by  the  l^bbuie; 
in  Debtnre.  b}*  the  state  ireAsum- :  in  \'iigiiiia,  br  the 
govenxw ;  tn  KenitKky,  by  the  people ;  m  North  Cho- 
lifta.  by  the  cownty  courts;   asd  in  Sooth  CwohBa  aod 


TAXATION  IN  17^. 


129 


Georgia,  by  the  legislature.  The  office  of  collector  was, 
in  many  cases,  attached  to  some  other  office.  In  Ver- 
mont, for  example,  the  first  constables  were  ex  officio  col- 
lectors; in  Maryland  and  Kentucky  the  sheriffs  were  gen- 
erally collectors  ; '  and  in  North  Carolina  and  Virginia  the 
sheriffs  were  such  ex  offitio,  being  appointed,  in  the  latter 
state,  from  a  list  of  justices  recommended  by  each  county. 

Though  the  collectors  in  Vermont  and  Massachusetta 
vere  chosen  but  for  one  year,  their  powers  continued  until 
a  final  settlement  was  made,  and  in  case  of  death  after 
the  term  for  which  elected  their  responsibilities  and  obliga- 
tions descended  to  their  administrators  and  executors.  In 
Connecticut  their  powers  continued  but  three  years.  Simi- 
lar customs  were  probably  in  force  in  other  states. 

As  has  already  been  noticed,  in  states  north  of  Delaware 
the  towns  were  the  collection  districts,  and  hence  were  re- 
sponsible for  deficiencies  on  the  part  of  their  collectors.  In 
some  instances,  the  treasurer  of  the  county  or  state  was  per- 
mitted, in  event  of  delinquency  or  insolvency  of  the  collector, 
to  collect  the  amount  of  deficiency  from  the  selectmen  or 
from  individuals  of  the  town,  if  need  be  by  distraining  goods 
and  chattels.  The  latter  were  of  course  permitted  to  in- 
demnify themselves  by  laying  a  new  lax  upon  the  town.  In 
other  states,  the    counties,   though    frequently   divided  for 

ivenience,  were  the  collection  districts,  and  the  collectors 
were  as  a  rule  responsible  to  state  authorities. 

The  collectors  in  the  first  group  of  states  were  generally 
permitted  to  distrain  and  sell  goods  and  chattels  —  certain 
things,  such  as  implements  of  trade,  work-horses,  etc.,  being 
excepted  —  of  those  delinquent  in  paying  their  taxes.  If 
these,  however,  were  insufficient,  the  delinquents  might  be  im- 
^—     prisoned;  or  if  they  had  escaped,  their  lands  might  be  seized. 

L 


TAXATION  AS  IT  IS. 


In  othei  states  the  collectors  merely  returned  the  names  o( 
delinquents,  and  summary  measures  were  taken  by  other 
authorities.  In  Marj'land  unpaid  taxes  became,  in  absence 
of  goods,  a  charge  on  ihe  land  ;  in  New  York  and  New  Jer- 
sey, they  were  added  to  the  next  year's  list.  The  land  of  ■ 
non-residents  became,  in  South  Carolina,  the  property  of  the 
state  if  taxes  remained  unpaid  after  certain  notice.  Bonda  I 
and  sureties  were  generally  required  of  collectors. 


COMPENSATION  OF  ASSESSORS  AND  COLLECTORS. 

As  to  the  compensation  of  assessors  and  collectore,  the 
following  have  been  noted  :  in  Vermont  the  assessors  re- 
ceived one-half  of  the  taxes  from  double  assessments,  per- 
haps in  addition  to  certain  other  remuneration  ;  in  Mas 
setts,  4  shillings  per  day ;  in  Rhode  Isianil  and  New  Jersey  , 
\\  per  cent,  of  amount  of  taxes  assessed  ;  in  New  York,  their 
fees  were  determined  by  the  supervisors ;  in  Pennsylvania, 
they  received  fi.oo  per  day;  in  Maryland,  not  over  £,2% 
per  year ;  in  Georgia,  2^  per  cent,  of  tax  assessed,  plus  6^ 
cents  on  every  poll  without  property. 

The  collectore  received  in  New  Hampshire  usually  4  or  5  j 
per  cent,  of  collections ;  in  Massachusetts,  from  3  to  5  per 
cent.;  in  Rhode  Island,  regularly  5  percent.;'  in  Connecti- 
cut, i\  per  cent,  and  travelling  fees ;  in  New  York,  5  per 
cent. ;  in  New  Jersey,  previous  to  1794,  ijf  per  cent.,  after 
1 794,  4  cents  per  poll ;  in  Pennsylvania,  5  per  cent. ;  in  Dela- 
ware, 7J  per  cent. ;  in  Maryland,  4  per  cent.,  and  such  sums 
as  seem  uncollectible  ;  in  Kentucky,  5  per  cent. ;  in  North 
Carolina,  6  per  cent.,  with  certain  additional  fees ;  in  South 
Carolina,  5  per  cent. ;  and  in  Georgia,  5  per  cent.,  with 
certain  fees. 

'  Though,  in  conseqiience  of  competition  for  the  oflice,  encouraged 


by  llie 


.  Ihe  SI 


eceived  had  been  reduced  lo  3}  per  c< 


,  pen 


CHAPTER    III. 


THE   TRANSITION    PERIOD. 


GENERAL   REMARKS. 


WE  may,  for  lack  of  a  better  designation,  call  the 
period  from  1796  to  the  beginning  of  our  Civil 
War,  a  transition  period.  It  witnessed  the  complete  estab- 
lishment of  the  American  system  of  state  and  local  taxation. 
The  distinguishing  feature  of  the  system  may  be  described 
in  a  single  sentence,  it  is  the  taxation  of  all  property,  mov- 
able and  immovable,  visible  and  invisible,  or  real  and  per- 
sonal, as  we  say  in  America,  at  one  uniform  rate.  This  is 
the  only  direct  tax  known  in  most  of  our  commonwealths, 
and  it  is  only  recently  that  certain  special  forms  of  taxation 
have  assumed  greater  importance  in  some  of  our  state 
budgets  than  this, 

The  fundamental  idea  of  our  tax  systems  is  a  democratic 
one.  It  is,  that  all  should  contribute  to  the  support  of  gov- 
ernment in  proportion  to  their  capacity  or  "respective  abili- 
ties," as  Adam  Smith  expresses  it.  U  is,  however,  assumed 
that  one's  ability  to  contribute  to  the  support  of  government 
is  measured  by  the  actual  selling  value  of  all  one's  properly, 
real  and  personal ;  then  it  is  further  assumed  that  it  is  pos- 
sible in  each  case  to  discover  the  actual  selling  value  of  all 
the  property  of  citizens  and  other  residents. 

The  last  chapter  shows  that  in  1 796  specific  kinds  of  prop- 
erty were  taxed,  and  in  some  cases  the  collective  mass  of 


132  TAXATION  AS  IT  IS. 


1 

;en,  how-     ^M 


I 


property.  The  general  practice  appears  to  have  been,  how- 
ever, to  tax  only  a  few  main  species  of  property,  and  rough 
kinds  of  devices  were  used  for  valuation.  Horees  and  cattle 
were  valued  at  a  definite  sura  each,  and  agricultural  lands 
were  often  classified  and  valued  at  so  much  for  each  acre  of 
each  class.  Persons  were  taxed  by  the  poll  uniformly,  and 
were  also  estimated  according  to  their  earning  capacity, 
and  taxed  accordingly.  President  Francis  A.  Walker  in  his 
"  Political  Economy  "  '  reaches  the  conclusion  that  faculty, 
the  power  of  production,  constitutes  the  only  theoretically  just 
basis  of  contribution  j  that  men  are  bound  to  serve  the  state  in 
the  degree  in  which  they  have  the  ability  to  serve  themselves. 
Taxation  according  to  faculty  is,  however,  rejected  as  imprac- 
ticable, but  in  earlier  and  simpler  times  it  was  practised  in 
the  American  Colonies, 

The  reasons  why  these  earliest  methods  were  abandoned 
are  sufficiently  evident.  They  were  adapted  only  to  a  primi- 
tive condition  of  society,  When  the  classes  of  wealth  be- 
came more  numerous,  and  when  the  differences  in  value 
between  articles  of  the  same  class  became  more  important, 
when  one  acre  of  land  was  often  worth  ten  or  twenty  times, 
or  even  fifty  times,  as  much  as  another  situated  in  the  same 
commonwealth,  there  could  not  fail  to  arise  a  demand  for  a 
system  of  taxation  which  would  adjust  the  burdens  of  the 
government  more  accurately  and  make  them  bear  upon 
each  individual  more  nearly  in  proportion  to  his  ability. 
seems  that  our  present  system  of  taxation  arose  with  this  in 
view,  and  in  our  older  American  commonwealths,  verj'  gen- 
erally, during  the  first  half  of  the  present  century  ;  while  the 
newer  states  simply  copied  the  institutions  of  the  older. 

The  details  of  the  changes  in  the  various  states  are  difficult 

to  discover,  owing  to  the  inaccessibility  of  many  public  docu- 

1  New  unabriilgcd  edition,  g  595. 


THE    TRANSITION  PERIOD. 


133 


ments,  but  it  has  been  possible  to  gather  together  the  main 
facts  about  several  states,  which,  there  is  eveiy  reason  to 
believe  from  what  can  be  discovered,  were  merely  typical. 
A  few  words  will  be  devoted  to  Connecticut  and  Ohio,  and 
some  facts  will  then  be  presented  regarding  other  states, 

coNNEcncirr. 

The  old  colonial  system  of  taxation  continued  in  Con- 
necticut until  the  adoption  of  tiie  constitution  of  i8ig.  It 
was  the  practice  to  follow  the  plan  still  in  vogue  everywhere 
in  Europe,  and  also  in  the  city  of  Quebec,  Canada,  of  basing 
taxation,  not  on  the  selling  value  of  property,  but  upon  its 
probable  net  revenue.  We  tax  property  now  in  our  American 
commonwealths  on  the  selling  value  of  property ;  but  the 
European  system  and  the  old  Connecticut  system  was  to 
estimate  income  itself,  directly.  It  was  also  the  practice  in 
Connecticut  to  estimate  the  annual  income  of  those  pttr- 
suing  any  trade  or  occupation,  and  to  lax  them  accordingly. 
The  plan  is  described  in  the  following  words  in  the  "  Report 
of  the  Special  Tax  Commission  of  Connecticut,"  made  in 
January,  1887 ;'  — 

"  Those  pursTiing  any  trade  or  profession  were  assessed  on 
an  estimate  of  their  annual  gains.  Real  estate  was  rated, 
not  according  to  its  value,  but  in  proportion  to  the  annual 
income,  which,  oc  the  average,  it  was  deemed  likely  to  pro- 
duce. I^ods  as  distinguished  from  buildings  were  put  in 
the  list  at  a  fixed  rate  for  each  kind,  prescribed  by  statute. 
The  best  meadow-land  went  in  at  82. 50  an  acre;  plough- 
land,  at  Si. 67 ;  pasture,  at  ?i.34 ;  wood-lots,  at  34  cents, 
etc. ;  not  because  those  sums  were  deemed  to  be  the  value  of 
the  lands,  but  because  ihey  were  thought  to  represent  the* 
'  Pages  9  and  10. 


134  TAXATION  AS  IT  IS. 

average  income  they  would  produce.  Houses  and  other 
buildings  were  likewise  listed  at  fixed  sums,  determined 
by  their  si/.e,  materiab,  number  of  fireplaces,  etc.,  but  alt 
(iescril>ed  by  the  statute  itself,  and  beyond  the  control  of 
ihc  assessors.  Under  such  a  system  there  was  little  oppor- 
tunity for  evading  taxation.  The  acreage  of  each  farm,  the 
general  character  of  each  lot,  and  the  dimensions,  use,  etc., 
of  each  building,  were  readily  ascertained,  and  the  law  then 
fixed  the  lale  of  assessment." 

Property  was  taxed  according  to  its  selling  value,  and  not 
according  to  its  probable  income,  after  iSig  ;  but  only  cer- 
tain classes  of  property  were  laxed,  and  there  were  different 
rates  for  real  estate  and  personal  property,  the  former  being 
assessed  at  only  liatf  the  rate  at  which  the  latter  was  assessed. 
Before  1850  real  estate  was  listed  at  only  three  per  cent,  of 
its  value,  while  personally  was  listed  at  six  per  cent,  of  its 
value;  but  in  1850  all  propt'rty  was  made  ratable  at  three 
per  cent,  of  its  true  value.  It  was  provided  in  i860  that  ail 
property  should  be  assessed  at  its  true  value.  The  present 
financial  system  of  Connecticut  may  be  said  to  date  from 
the  years  1850  and  1851,  when  it  was  provided  that  all 
property  not  specially  exempted  should  be  taxed,  and  when 
persona]  taxation  was  restricted  to  its  roost  injurious  fonn, 
the  capitation  tax. 


land  was  divided  into  three  classes,  according  to  "quality," 
and  there  were  three  rates  of  taxation  per  hundred  acres  j 
one  for  land  of  the  fir^t  quality,  another  for  land  of  the 
second  quality,  and  still  another  for  land  of  the  third  quality. 
This  method  of  taxation  continued  until  1825,  inclusive. 
These  rates  in  1800  were  Jto.Sj.  (10.60,  and  to,2^  per  him- 
drcd  acres,  according  to  quality.      The  rates  in  1815  were 


THE    TRANSITION  PERIOD- 

li.go,  ti.isj-,  and  S0.75,  respectively.  During  this  period 
the  highest  rates  are  found  in  the  year  1816,  when  they 
were  183.75,  ?3-oo<  ^"'1  t'^-oo,  respectively. 

Until  i8»6,  in  Ohio,  it  was  found  necessary  to  tax  only 
rea]  estate  for  state  purposes.  Funds  for  county  purposes 
were  derived  from  a  poll  tax,  and  a  tax  upon  horses,  mules, 
and  cattle,  to  which  w;is  added  by  legislative  appropriation, 
a  percentage  from  one-fifth  to  one-half,  varying  with  the 
several  years,  from  the  taxes  levied  upon  real  estate. 

The  tax  laws  passed  in  iSaj  and  1831  show  how  much 
more  diversified  property  was  becoming.  These  acts  enu- 
merate for  taxation,  lands  and  town  lots,  including  buildings, 
horses,  cattle,  pleasure  carriages  over  Sioo  in  value,  mer- 
chants' and  brokers'  capital,  money  at  interest,  all  grist  and 
saw  mills,  all  manufactures  of  iron,  glass,  paper,  clocks,  and 
nails,  all  distilleries,  breweries,  tanneries,  all  iron,  brass,  and 
copper  foundries. 

One  feature  of  the  early  Ohio  system  is  specially  note- 
worthy. February  3,  1825,  an  act  was  passed  entitled  "An 
Act  establishing  an  equitable  mode  of  levying  the  taxes  of 
this  state.'"  The  only  animals  subject  to  taxation  were 
"all  horses,  mules,  asses,  and  all  neat  cattle  three  years  old 
and  upward."  Section  15  provided  that  land  should  be 
valued  "without  taking  into  consideratian  the  value  of  the 
actual  improvements  maiie  thereon" ' 

Dwelling-houses  over  the  value  of  8aoo  were  valued  at 
their  line  value  in  money,  "  but  few  of  our  country  houses 
were  at  that  time  rated  above  that  sum."  All  horws,  mules, 
and  asses  were  assessed  at  {40,  and  all  neat  cattle  at  £8  per 
head.     These  provisions  were  not  changed  in  the  revision 

'  25  Ohio  Laws,  page  58. 

*  Land  was  lased  in  Kentucky  at  the  beginning  of  the  ci 
out  regud  to  improve 


136  TAXATION  AS  IT  IS. 


I 


of  iSji,  but  continued  in  force  untU  1846,  when  the  present 
system  of  taxation  was  introduced. 

The  essential  point  is  the  exemption  of  iroprovemeots, 
A  man  was  not  made  to  pay  what  seems  to  many  like  a 
penally  for  adding  to  the  wealth  of  the  country.  I  have 
received  a  letter  on  the  subject  of  early  Ohio  taxation  from 
a  gentleman,  then  a  resident  of  the  state,  since  3  judge  on, 
the  Supreme  Bench  of  another  stale,  and  now  the  head  of  a 
law  school,  from  which  I  make  these  quotations : '  "  The 
result  of  rating  farm  lands  unimproved  was  l>eneficent,  and 
large  bodies  of  land  were  held  in  Northern  Ohio,  where  1 
lived,  by  non-residents ;  and  they  generally  held  on  to  their 
lafld  until  pioneeis,  by  improving  neighboring  farms,  ren- 
dered this  land  \-aluable.  In  respect  to  the  naked  value  of 
the  land,  they  received  equal  benefit  from  the  labor  of  these 
pioneers,  and  should  not  complain  if  their  land  was  taxed 
equally.  The  effect '  was  to  induce  them  to  sell  to  those 
who  would  use  the  land,  improve  it,  and  obtain  a  profit 
from  ii  by  way  of  production,  and  not  simply  by  rise  in 
value.  It  thus  contributed  to  the  more  rapid  settlement 
of  the  state.  It  also  tended  to  discourage  farmers  from 
buying  more  land  than  they  could  use.  Another  feature 
of  the  general  lax  act  had  a  good  effect  I  refer  to  the  fact 
that  all  horses  were  listed  at  one  price,  and  so  of  homed 
cattle.  TTie  farmers  were  thus  encouraged  to  raise  good 
stock  only.  Taxation  upon  actual  value  depresses  industry, 
especially  efforts  to  excel.  Bams,  fences,  fine  fields,'  good 
ploughs,  harness,  etc.,  were  not  taxed  at  all;  and  if  the 

'  I  miut  *1m)  KckooHledgc   my   indcbtednesi  to  my  good  (riend 
Profcsiui  Geoige  W.  Kjkight,  of  ihc  Unirenity  of  the  Su 
Imi  kdI  mc  copies  of  the  old  t»i  Uws. 

*  That  is.  of  the  new  tu  Uv. 

*  Endent^  fuiitg  fieltb  rendered  fine  by  unpcoTOi 


:lltH 


J 


THE    TRANSITION  PERIOD. 


137 


farmer  should  raise  a  team  worth  from  jjoo  to  j6oo,  as 
any  one  can  do,  he  paid  no  more  tax  than  for  a  crowbait 
pair  of  horses  worth  J50,  which  he  should  never  be  per- 
mitted to  raise  or  keep.  In  raising  neat  cattle,  also,  the 
uniform  assessment  of  $S  encouraged  him  to  have  the  best," 


I 


OTHER  STATES. 

Maryland  introduced  the  present  system  of  taxation  in 
1841,  when,  after  an  interval  of  years,  it  was  again  necessary 
to  have  recouree  to  general  taxation  for  state  puqioses.  The 
present  direct  tax  on  the  value  of  all  property  seems  to  have 
obtained  for  local  purposes  since  the  framing  of  the  consti- 
tution of  1776.  It  may  be  remarked  incidentally  that  reg- 
ular taxation  in  Europe  appears  generally  have  been  first 
introduced  in  cities,  as  might  naturally  be  expected  from 
their  more  advanced  industrial  situation  and  the  earlier  ne- 
cessity for  them  to  abandon  old  methods  of  personal  service 
and  payment  in  kind,  and  on  account  of  their  larger  public 
needs.  So  in  this  country  there  appears  to  have  been  litde 
serious  thought  of  ever  abolishing  local  taxation,  even  in 
those  states  which  were  able  for  a  lime  to  live  without  gen- 
eral taxation. 

Virginia,  including  what  is  now  West  Virginia,  adopted 
the  main  features  of  its  present  method  of  taxation  in  1852, 
when  a  new  constitution  went  into  effect.  Before  that  time 
the  only  tax  on  invisible  property  was  a  small  one  on  divi- 
dends and  interest.' 

New  Hampshire  taxed  visible  objects,  and  included  in- 
comes in  1772;    but  no  other  changes,  except  in   detail, 

•  See  "  West  Virginia  Tax  Commisiion  Minority  Report,"  by  Joseph 
'    Bell,  1884,  page  21. 


TAXJ  rroif  AS  IT  IS. 


Jl  properlj  ^H 

Jl    personal  ^^k 
panics    and    ^ 


\ 


were  introduced  before  the  Civil  War,  when   all   ] 
was  made  taxable.' 

All  real  estate  not  especially  exempted, 
estate,  shares  of  slock  in  incorporated  companies  and 
banks,  incomes  from  professions,  trades,  and  occupations 
(except  fanners),  and  bank  stock,  were  made  subject  to 
taxation,  both  for  state  and  county  purposes,  in  Pennsyl- 
vania in  the  year  1841.' 

I  have  been  unable  to  find  the  date  of  the  change  in 
Massachusetts,  probably  because  it  was  not  sufficiently 
marked  to  attract  the  attention  of  those  who  have  re- 
viewed taxation  in  that  state.  The  list  of  ratable  prop- 
erty, which  was  in  1796  so  long  as  lo  include  almost 
everything,  might  be  made  general  without  making  many 
changes  in  the  laws  of  taxation. 

In  the  Louisiana  constitution  of  1845  it  was  provided  that 
after  1848  property  should  be  taxed  according  lo  value. 

The  constitutions  of  all  the  Southern  states,  adopted  after 
the  close  of  our  late  war,  provided  for  the  taxation  of  all 
property  according  to  its  selling  value.  It  is,  then,  safe 
to  say  that,  at  the  close  of  our  late  Civil  War,  our  property 
tax  was  in  force  everywhere,  and  the  transition  period  fully 
terminated.  UTiile  I  have  not  found  all  the  facts  which  I 
could  desire,  I  have  found  none  which  would  not  harmonize 
with  this  statement. 

•  See  report  of  Hon.  George  T,  Sawyer  on  "TM»tion,"  made  to  the 
leeisbnue  of  New  Haiopsliire  in  x'&^^>. 

'See  Woiihiogton's  "Skelch  of  the  Fuuucct  of  Peiuiiylvaiiia,* 


A 


THE    TRANSITION  PMXIOD. 


REASONS   FOR  THE  TAXATION  OF  Ar,L   PROPERTY   AT  ONE 
UNIRJRM    RATE. 

One  reason  why  our  present  system  of  taxation  was  uni- 
vereally  introduced  may  be  found  in  ihe  progress  of  demo- 
cratic thought.  It  was  desired  that  all  should  contribute 
in  proportion  to  their  abilities.  It  was  observed  that  the 
forms  of  property  had  increased  rapidly  in  number,  and 
that  the  old  specifications  of  property  to  be  taxed  failed  to 
reach  large  masses  of  wealth;  and  this  proiiuced  djssatis- 
&ction  and  irritation.  The  sentiment  to-day,  all  over  the 
Union,  in  favor  of  the  taxation  of  all  property  is  very  strong. 
The  constitution  of  Ohio,  adopted  in  1851,  best  gives  ex- 
pression to  prevailing  sentiment  when  it  expressly  provides 
that  even  state  and  local  bonds  shall  never  be  exempted 
from  taxation.  It  is  of  no  avail  to  talk  about  abolishing 
taxes  on  personal  property,  as  some  do,  unless  something 
is  substituted  for  the  persona!  property  tax,  so  unalterable  has 
become  the  determination  to  tax  every  one  in  proportion  to 
his  ability.  This  is  one  of  the  first  facts  to  attract  the  atten- 
tion of  the  student  of  American  linance. 

The  new  classes  of  property  which  modem  inventions 
and  discoveries  and  the  industrial  revolutions  accompanying 
them  have  produced  are  one  of  the  striking  facts  in  our  finan- 
cial situation,  and  it  can  never  be  safely  left  out  of  view  by 
the  practical  legislator.  Early  in  this  century,  it  should  be 
remembered,  there  were  comparatively  few  banks  ; '  there  was 
not  a  single  railroad  company,  and  of  course  none  of  that  mass 
of  easily  concealed  property  based  on  railways,  such  as  stocks 
and  bonds ;  there  was  not  a  telegraph  or  telephone  com- 
pany, nor  were  there  any  traces  of  that  property  which  con- 

'  When  Hamilton  wrote  bis  is 
Bank,  in  1790,  there  were  liul  Ihra 


I«  TAXATION  AS  IT  IS. 

sists  of  their  evidences  of  indebtedness ;  there  was  not  one 
gas  company ;  there  was  not  one  street-car  line ;  and  the 
manufacturing  corporations  of  our  day  had  scarcely  begun 

Some  way  must  be  contrived  to  make  owners  of  these  new 
kinds  of  property,  who  include  most  of  our  wealthiest  citi- 
zens, pay  their  due  share  of  taxes.  It  was  possible  to  go  on 
with  old  methods  when  the  rates  of  taxation  were  low,  as 
before  the  war,  because  public  burdens  were  so  light  that  it 
scarcely  seemed  worth  while  to  trouble  one's  self  about 
them.  The  town  population  was  small,  and  most  people 
paid  only  stale  and  county  taxes,  and  township  taxes  suffi- 
cient to  meet  the  needs  of  rural  districts.  Rates  of  taxation 
of  one,  two,  and  three  per  cent,  arc  not  now  unusual,  as  will 
be  seen  later;  but  in  Virginia,  in  1796,  a  tax  of  one-fourth 
of  one  per  cent,  on  the  assessed  value  of  land,  which  was 
fixed  once  for  all,  and  must  have  been  below  its  tnie  value, 
WHS  sufficient.  Some  states  had  no  state  tax ;  and  others 
taxed  land  at  a  small  sum  per  acre  or  per  hundred  acres,  as 
for  example,  Ohio  and  Connecticut,  for  which  the  rates  have 
been  mentioned,  and  Kentucky,  where  the  best  land  was 
taxed  only  a  half  of  a  dollar  for  a  hundred  acres. 

A  committee  was  appointed  by  the  General  Assembly  of 
Coimecticut  in  1844,  to  inquire  into  the  subject  of  taxation ; 
and  it  reported  in  favor  of  the  abolition  of  the  State  Board 
of  tiqualiiation,  because  it  was  a  clumsy  contrivance,  and 
the  state  tax  was  so  inconsiderable  that  it  made  little  dif- 
ference whether  property  in  different  parts  of  the  stale  was 
assessed  at  the  same  proportion  of  its  actual  value  or  not. 
Now  the  state  lax  is  ten  times  as  great  as  it  was  in  1844.' 

The  municipal  tax  rate  in  the  city  of  Baltimore  in  the 
same   year  was    70J    cents  on  the  5ioo,  and  the  amount 

'  "  Report  of  the  Special  T«x  CommitteE  uf  Conn  eel  icul."  tSvS. 


THE    TKANSmON  PERIOD. 

"collected  within  the  year  upon  the  levy  for  that  year"  was 
8254,394,87  ;  whereas  in  1884  the  rate  was  f  1.60,  and  the 
amount  collected  within  the  year  on  ihe  levy  for  the  year 
was  $2,774,073.84,  over  ten  times  as  much.' 

Part  IV.  will  give  additional  data  about  expenses  of  states 
and  local  political  units  at  present  and  in  past  times. 

DISSATISFACTION   EARLY   MANIFESTED. 

The  existing  method  of  assessing  and  taxing  property  was 
belter  adapted  lo  the  first  half  of  the  nineleenih  century 
than  to  the  second  half,  because  taxation  was  less  important, 
and  also  because  property  could  more  readily  be  found. 
This  follows  from  the  difference  in  the  kinds  of  property 
which  existed  in  earlier  times  and  at  present,  and  also  from 
the  fact  that  people  were  less  migratory  and  cities  smaller, 
for  in  cities  property  can  more  readily  be  concealed  than  in 
villages  and  in  the  country.  Formerly  people  were  required 
to  tell  what  their  neighbors  were  worth,  and  the  proportion 
between  the  property  of  their  neighbors  and  their  own  — 
which  could  not  well  be  done  at  the  present  time.  A  curious 
illustration  of  older  methods  is  furnished  by  Rhode  Island. 
The  first  real  tax  law  was  passed  in  1673,  and  in  this  it  was 
provided  that  "  if  the  Assembly  judge  any  have  unden'alued 
their  estates,  each  shall  be  required  lo  give  in  to  the  treas- 
urer a  true  form  of  an  inventory  of  all  their  estate  and 
strength  in  particular,  and  give  in  writing  what  proportion 
of  estate  and  strength  in  particular  he  guesst'ih  ten  of  his 
neighbours,  nameing  them  in  particular,  hath  in  estate  and 
Strength  to  his  estate  and  strength."  ' 

No  sooner,  however,  were  existing  methods  introduceii 

1  Sm  "  Rq>on  of  Ihc  Bttiimore  Tax  Committion,"  1S86,  Appendix. 
»  Mt.  H.  B.  Gardner's  mon..Bta|..h. 


14Z 


TAXATION  AS  /T  IS. 


on  account  ^^ 
of  taxation,  ^H 

miption  up  ^H 


than  wide-spread  dissatisfaction  became  nianifc 
of  inequalities  in  the  adjustment  of  the  burdei 
and  attempts  were  made  to  remedy  this. 

This  dissatisfaction  has  increased  without  interruption  u 
to  the  present  time,  and  every  year  renders 
methods  of  assessing  property,  and  of  taxing  it,  more  intoler- 
able. The  endeavors  to  improve  upon  actual  methods  have 
been  freciuent  and  are  daily  increasing  in  frequency ;  but 
they  usually  prove  fruitless  or  render  a  bad  matter  worse, 
because  those  who  make  them  have  failed  to  go  to  the  root 
of  the  evil,  which  is  the  system  itself.  The  truth  is,  the 
existing  system  is  so  radically  bad,  that  the  more  you 
improve  it,  the  worse  it  becomes.  'ITiis  lies  in  the  nature  of 
things,  and  nothing  any  legislature  can  do  can  alter  this 
condition  of  thin^.  Experience  and  reason  alike  teach 
this,  and  in  my  opinion  place  it  beyond  controversy  for  all 
those  who  have  eyes  to  see  what  is  passing  about  them  every 
day  of  their  lives.  t 

There  was  comparatively  little  personal  property  ia  J 
existence  one  hundred  years  ago.  Only  in  the  present 
century  has  that  species  of  property,  at  first  gradually,  then 
very  rapidly,  assumed  the  enormous  proportions  to  which 
we  are  now  accustomed.  This  growth  has  accompanied  the 
development  of  cities,  which  are  the  home  of  invisible  per- 
sonal property.  Where  the  population  is  chiefly  rural,  there 
can  be  comparatively  little  personal  property,  and  a  large 
part  of  what  does  exist  is  visible  and  easily  found. 

When  our  first  census  was  taken  in  1 790,  about  one  in 
thirty  of  our  population  was  a  resident  of  a  city,  but  since 
then  the  urban  population  has  steadily  gained  on  the  rural 
population,  until  now  one-fourth  of  the  population  is  urban. 
The  following  table,  taken  &om  the  last  census  report  oa 


THE    TRANSITION  PERIOD.  H3 

population,  shows  the  movement  of  population  towards  the 
cities  from  1790  to  1880:  — 

iDhabilanBofihpcilies 
total  populalion. 

1790 3-3 

iSoo 3.3 

1810 4.9 

1820     . 4.9 

1830 6.7 

1840 8.5 

1850 H.5 

i860 16.1 

1870 Z0.9 

"S 

There  is  every  reason  to  expect  a  continued  concentration 
of  population  in  cities,  and  a  rational  scheme  of  taxation 
will  keep  this  movement  in  view. 

Personal  property  has  increased  relatively  more  rapidly 
than  real  property,  until  now  it  is  regarded  as  its  equal  in 
value  in  most  of  our  American  commonwealths.  This  would 
seem,  however,  to  be  a  low  estimate,  if  we  may  regard  the 
Ln  English  writer'  on  finance,  in  regard  to 
England,  as  at  all  trustworthy ;  for  as  early  as  1869  he  es- 
timated the  value  of  personal  property  in  England  at  double 
that  of  real  property. 

THE   NATURE  OF  THE   DIFncULTV. 

The  reason  why  our  present  system  of  taxation  does  not 

operate  satisfactorily  can  be  stated  in  a  word  :  although  it  is 

on  the  face  of  it  fair  and  simple,  it  is  found  in  practice  to  be 

an  impracticable  theory,  for  a  large   portion  of  property 

'  Dudley  Baxter. 


144 


TAXATION  AS  IT  IS. 


I 


escapes  taxation,  and  that,  the  propyerty  of  those  best  able 
to  bear  the  burdens  of  government,  namely,  the  wealthy  . 
residents  of  cities.  On  the  one  hand,  it  is  impossible  to 
find  this  property,  and  to  force  men  to  make  returns  under 
oalh,  results  invariably  in  peijur^'  and  demoralization,  with- 
out discovery  of  property  ;  on  the  other  hand,  federal  laws 
over  which  our  states  and  municipalities  have  no  control, 
enable  many  to  escape  taxation  by  investments,  often  tem- 
porary, in  federal  bonds,  exempt  from  taxation. 

Personal  property  is  sometimes  discovered  in  its  entirety, 
but  it  is  then  nearly  always  the  property  of  the  compara- 
tively helpless,  namely,  widows  and  orphans,  whose  posses- 
sions are  a  matter  of  public  record.  Less  often  a  burden  is 
imposed  upon  the  conscientious.  Thus,  I  happen  to  know 
of  one  wealthy  town  of  a  few  thousand  inhabitants,  where 
three  men  of  conscientious  convictions  with  regan!  to  a  citi- 
zen's duty  to  the  commonwealth,  pay  taxes  on  their  person- 
alty, although  they  have  as  good  an  opportunity  to  escape 
as  others.  This  state  of  things  naturally  produces  dissatis- 
faction on  the  part  of  farmers  and  other  hard-working 
people,  who  feel  that  personally  ought  to  bear  a  share  of  the 
burden  of  taxation.  On  this  account  they  suggest  various 
things,  like  taxation  of  mortgages  and  a  more  vigorous 
search  for  hidden  property.  Their  aim,  as  I  have  said,  is 
commendable,  but  to  attempt  to  reach  the  desired  goal  liy 
direct  means,  under  existing  laws,  or  any  laws  which  do  not 
imply  a  change  of  ihe  system  of  taxation,  is  as  Utopian  as 
the  dream  of  the  most  radical  socialist.  If  we  desire  to 
accomplish  a  purpose  we  must  use  means  adequate  to  the 
end  in  view. 

As  there  is  a  general  misapprehension  of  the  facts  of  the 
case,  and  as  it  is  desirable  to  abandon  at  once  all  fruitless 
efforts  to  realize  a  Utopia,  it  is  well  to  interrogate  past  expe- 
rience and  reason. 


THE   TRANSITION  PERIOD. 


THE  TESTIMONV   OF  EXPERIENCE, 

I  have  first  to  remark  that  the  one  uniform  tax  on  all 
property  as  an  exclusive  source  of  revenue,  or  the  chief 
source  —  the  main  feature  in  direct  taxation — never  has 
worked  well  in  any  modem  community  or  state  in  the  entire 
civilized  world,  though  it  has  been  tried  thousands  of  times, 
and  although  all  the  mental  resources  of  able  men  have  been 
employed  to  make  it  work  well.  I  have  read  diligently  the 
literature  of  finance  to  find  one  example,  but  in  vain,  and 
lest  this  should  not  be  sufficiently  trustworthy,  I  have  made 
it  my  business,  in  my  capacity  as  tax  commissioner,  to  visit 
typical  states  and  cities  and  to  make  inquiries  in  person,  of 
citizens  as  well  as  of  officials  intrusted  with  the  adminis- 
of  the  laws.  I  have  visited  Charleston,  South  Caro- 
lina ;  Savannah,  Adanta,  and  Augusta,  Georgia  ;  Columbus, 
Ohio ;  Madison,  Wisconsin ;  Toronto,  Montreal,  and  Que- 
bec, Canada ;  and  the  result  has  been  abundantly  to  con- 
firm all  that  I  have  said  about  the  impracticability  of  the 
one  uniform  tax  on  real  and  personal  property.  The  expe- 
tvo  or  three  stales  with  the  single  direct  tax  on  all 
property  will  be  told  in  the  following  chapters. 


PROBABLY  the  most  vigorous  effort  to  apply  present 
methods  may  be  found  in  Ohio,  and  to  the  experi- 
ence of  Ohio  I  will  accordingly  devote  some  considerable 
space.' 

The  Ohio  system  is  the  Maryland  idea  perfected,  though 
perfected  seems  the  wrong  word  to  use ;  for,  as  already  re- 
marked, it  is  characteristic  of  this  system  that  the  more  you 
perfect  it,  the  worse  you  make  it.  However,  it  is  a  vigorous 
attempt  to  cany  the  Marj-land  idea  into  practice. 

CONSTtTOnONA!.    PROVISIONS. 

It  may  be  remarked  in  general  of  the  Ohio  const it'.ition, 
that  it  imposes  excessive  limitations  upon  the  legislative 
power.  It  prescribes  too  many  things,  for  it  was  drawn  up 
at  a  time  when  becoming  alarmed  at  abuses  of  power,  people 
were  more  inclined  to  abolish  or  restrict  power  than  to  learn 
how  to  use  it  properly ;  as  sensible  a  proceeding  as  that  of 
the  mother  who  wished  her  boy  to  learn  to  swim,  without 

■  II  may  be  proper  to  state  lirst  that  an  my  arrival  in  Columbus  I 
was  taken  to  the  office  of  the  GovEinor,  Hon.  Joseph  B.  Fuiaker,  by 
my  friend.  Rev.  Washington  Gladilen;  that  I  was  cuurteousiy  ccccivcd 
by  the  Governor,  and  by  him  inln^duced  to  oiber  gentlemen  whom  it 
seemed  desirable  that  I  should  meet,  and  every  facility  given  me  for 
the  prosecution  of  my  inquirin.  Special  mention  should  be  made  of  tbe 
courtesy  of  Hon.  Erail  Kiesen-etter,  Auditor  of  State,  who  explained  at 
IcDgtb  every  point  in  the  system  of  laxBIiob  which  it  under  his  controL 


I 


EXPERIENCE   OF  OHIO.  \^1 

incurring  the  danger  of  drowning  in  the  water.  The  result 
is,  that  having  shorn  themselves  of  contra]  over  finance,  ihe 
sinews  of  war,  the  people  have  often  engaged  in  an  unequal 
contest  with  vast  corporations  not  subject  to  like  limitations. 
This  remark  applies  to  the  state  of  Maryland,  where  we  find 
the  state  not  able  to  borrow  money  for  the  maintenance  of 
the  Chesapeake  and  Ohio  Canal,  while  no  restrictions  are 
impwsed  upon  the  borrowing  powers  of  railway  corporations, 
which  may  be  rival  enterprises.  Unless  the  people  dare 
to  trust  themselves  in  financial  matters,  they  must  always 
expect  to  be  worsted  in  contests  of  this  kind.  Liberty  is 
illusory  for  those  who  fear  to  trust  themselves. 

The  most  general  provision  of  the  constitution  of  Ohio, 
on  the  subject  of  taxation,  is  found  in  sections  a  and  3, 
Article  XII.,  which  reads  as  follows  ;  — 

"Sec.  2.  Laws  shall  be  passed  taxing  (i)  by  a  uniform  « 
rule,  all  moneys,  credits,  (z)  investments  in  bonds,  stocks, 
(3)  joint  stock  companies  or  otherwise  ;  and  also  all  {4)  real 
and  personal  property,  (5)  according  lo  its  true  value  in 
money ;  (6)  but  burying- grounds,  public  school -houses, 
houses  used  exclusively  for  public  worship,  institutions  of 
purely  public  charity,  public  property  used  exclusively  for 
any  public  purpose,  (7)  personal  property  to  an  amount  not 
exceeding  in  value  J200  for  each  individual,  may,  by  general 
laws,  be  exempted  from  taxation ;  but  all  such  laws  shall  Iw 
subject  to  alteration  or  repeal,  and  the  value  of  all  property 
so  exempted,  shall,  from  time  to  time,  be  ascertained  and 
published  as  may  be  directed  by  law. 

"  Sec.  3.  The  General  Assembly  shall  provide  by  law  for 
taxing  the  notes  and  bills  discounted  or  purchased,  moneys 
loaned,  and  all  other  property,  (i)  effects  or  dues,  of  every 
description  (without  distinction),  (2)  of  all  banks,  now  exist- 
iog,  or  hereafter  created,  and  of  all  bankers,  {3)  so  that  aU 


MS 


TAXATION  AS  IT  IS. 


)ii\i|icrly  employed  in  banking  shall  always  bear  a  burden  of 
UXiitian  ci)Ukl  lo  ihnt  imposed  on  ihc  propeny  of  indi- 
vidual!)." 

ll  ID  itlao  provided  that  the  state  may  create  a  debt  to  J 
tU}>ply  cuttal  deliuts  or  £iilure  of  rewnuc,  lo  the  amount  of  1 
%iyyjxn,  but  for  no  tugrr  amount,  and  that  no  debt  stuR  ] 
be  contracted  Ku  any  internal  improvement.    This  rendeis 
it  iwc««aiy  thai  private  corporations  should  conr  out  aU 
ftiture  internal  improvements,  or  that  such  wi»k  shouKI  be 
tloiw  by  the  tooal  political  units  of  the  state,  though  it  wiD 
ha{»pra  at  ttaKs  that  an  intrntal  im|HovenKnt  is  km  switible 
ft>r  a  local  govvrameat.  while  it  is  not  desirabie  to  iDtrast  it 
10  ft  pnni*  cotponiioo. 


a^rW  ftMMidiiiftgmsgMltafkgiMtnc 

fcg  tfct  padf.  the  tuiiHlMMi  i^ifcrAa 
p««k.-«tar  ciqr.    'He  yncl 


EXPERIENCE   OF  OHIO. 


149 


I 


The  county  auditor,  who  is  at  the  head  of  the  county 
system  of  taxation,  as  the  state  auditor  is  at  the  head  of 
the  state  system,  furnishes  to  the  assessor  of  each  district 
a  description  of  each  tract  and  lot  of  property  in  the  dis- 
its  owner,  the  number  of  acres  it  con- 
tains, etc.  If  necessary,  the  county  commissioners  may  ad- 
;  for  bids  for  the  construction  of  suitable  maps  for  this 
purpose. 

Each  dbtrict  assessor  must  value  real  estate  after  careful 
examination  ;  and  in  case  the  owner  cannot  or  will  not  give 
all  necessary  data,  he  may  cause  a  survey  of  the  land  to 
made  at  the  owner's  expense. 

The  assessor  must  note  in  his  plat-book  the  value  of  all 
houses,  mills,  and  other  buildings,  which  exceed  jioo  in  value, 
the  number  of  acres  of  arable  or  plough  land,  the  number  of 
acres  of  meadow  and  pasture  land,  also  of  wood  and  uncul- 
tivated land  in  each  tract.  Each  tract  is  to  be  valued  sepa- 
tately  "at  its  true  value  in  money,  excluding  the  value  of  cropra 
growing  thereon  ;  but  the  price  for  which  such  real  property 
would  sell  at  auction  or  at  forced  sale,  shall  not  be  taken  as 
the  criterion  of  the  true  value." 

The  county  auditor  must  correct  returns  from  time  to 
time  on  account  of  new  buildings  or  destruction  of  buildings. 

As  the  assessment  in  each  county  is  under  the  control  of 
one  man,  the  valuation  is  generally  uniform  as  1:>etween  the 
various  parcels  of  real  estate  within  a  county.  The  county 
auditor  of  Franklin  County,  in  which  Columbus  is  situated, 
at  the  time  of  last  assessment,  which  took  place  in  1880,  re- 
quired all  assessors  to  meet  in  his  office  once  in  two  weeks 
to  compare  notes  and  to  secure  the  adoption  of  uniform 
methods.  A  comparatively  uniform  assessment  of  property 
was  thus  secured  in  Franklin  County. 

The  valuation  as  between  the  various  counties  is  not  uni- 


ful  \ 
ive  I 
be  \ 


form,  but  real  property  is  viJued  all  the  way  from  seventy-five  I 
per  cent,  of  itx  true  value  down  to  twenty-five  per  cent.  A 
■tatc  boatrl  of  r<]iia1iMtion  is  elected,  whose  duty  it  is  to  see  ' 
that  pTo)teTty  in  all  ports  of  the  state  is  equally  assessed ; 
and  ri^lit  here  we  eneountrr  n  difficulty.  Each  member  of 
the  txiard  ut  elected  from  a  senatorial  district,  ajid  he  feeb 
ihat  he  teprcsents  his  constituents  and  not  the  state  of  Ohio. 
M  tbe  hiw  cottKntphtcs  ;  ronsequcntly  each  tries  to  reduce 
An  uanaed  vahMtkm  of  the  part  of  the  state  which  he  reprc- 
■tntt,  aH  OAtfas  to  the  coattaiy  notwithstanding.  We  hare 
hen  nro  dearty  narited  defects  which  shoold  be  avaided. 
Ttw  coauiMtioo  of  bctuds  cooccned  widi  UTrtwn  sboqld 
ftM  be  of  m^  a  nature  dm  each  nmst  aaMnOy  fed  thu  he 
mfWCBto  a  pankufar  locakty ;  srcood,  ^ipaiDAed  taxoS- 
ciiki  ai*  on  tbe  wtede  pcHetabk.  for  decKd  cStaah  ahn^ 
tar  liflHaibil  pctsoas  and  do  BOt  Ksess  ^OB  lor  90  Hack 
m  A«y  know  Aer  AaAL  t  was  lokl  m  Cofanbas  abowt 
one  waaaeBiaom  oficial  wbo  ttied  u>  cany  ooa  tke  b»,  and 
(face  al  ^(uiiett^r  upon  tbe  tax  dfttraar.    Ibe  an^  cob- 

WMByodMnofthephnAevi^ftpelibaB&rife  a 
liafcwdtetocrfbQMidrfaBwai^aBd  i  far  s 


EXPERIENCE   OF  OHIO.  151 

taxed  on  the  general  assessment  for  state  and  county  pur- 
poses. Many  signatures  were  received  before  peojile  seemed 
to  realize  the  character  of  the  undertaking.  The  petition 
was  taken  to  Albany,  and  the  board  abolished  by  the  legis- 
lature. 

Another  defect  of  the  Ohio  system  is  noteworthy,  espe- 
cially for  us  in  Maryland.  The  assessment  of  property  once  I 
in  ten  years  is  not  often  enough,  and  owing  to  changes  in 
value  it  leads  to  injustice  as  between  citizens.  The  gov- 
ernor used  these  words  on  this  subject  in  his  annual  mes- 
sage, dated  Jan.  4,  1887:  "The  last  decennial  appraise- 
ment of  real  estate  was  had  at  a  period  of  great  prosperity  ; 
it  was  a  time  of  general  high  values ;  since  then  there  has 
been  a  heavy  decline  ;  farm  propierty  is  from  twenty-five  to 
fifty  per  cent,  cheaper  to-day  than  it  was  then.  The  con- 
sctiuence  is,  that  fanning  lands  of  the  state,  where  they  have 
not  been  affected  by  the  growth  of  cities  or  other  develop- 
ment, are  now  taxed  on  the  average  more  nearly  at  their 
fiill  value  than  any  other  class  of  property.  In  fact,  the 
&rm  lands  of  some  of  the  counties  are  taxed  at  even  more 
than  they  could  l>e  sold  for.  But  while  this  is  true  of  the 
fium  lands,  the  reverse  is  true  of  the  real  estate  of  many  of 
the  cities  of  the  state  where  there  has  been  growth  and 
development,  as  in  some  portions  of  Cincinnati  and  in 
Cleveland,  Toledo,  Columbus,  and  many  other  cities  that 
might  be  named.  The  valuations  placed  upon  the  real 
estate  of  these  cities  in  iSSo  are  in  the  aggregate  fifty  per 
cent,  of  their  present  true  value  in  money,  and  in  some 
cases  they  will  not  exceed  twenty-five  per  cent. 

"The  consciousness  of  this  lack  of  uniformity,  and  the 
consequent  injustice  that  must  result  to  all  who  are  fairly 
taxed,  has  had  much  to  do  in  producing  the  unsatisfactory 
results  that  are  experienced." 


1S2  TAXA  TION  AS  IT  IS. 

This  passage  from  the  message  of  the  governor  of  Ohio 
shows  the  desirabihty  of  more  frequent  assessments.  An 
assessment  once  in  ten  years  is  not  often  enough  in  any 
American  state,  because  our  values  (iuctuale  so  rapidly. 
\V'hen  assessments  arc  made  only  at  rare  intervals,  a  por- 
tion of  the  burdens  of  the  state  and  local  government  is 
taken  from  those  who  have  been  specially  prospered,  —  that 
is  to  say,  those  whose  property  has  risen  in  value  and  who 
might  with  propriety  be  called  upon  to  contribute  a  larger 
share  to  the  public  treasury  than  others,  —  and  an  additional 
burden  is  placed  upon  those  who  have  suffered  the  mis- 
fortune to  witness  a  depreciation  of  their  property,  and  who 
might  with  reason  ask  for  special  consideration  at  the  hands 
of  the  tax-assessor  and  tax-gatherer.  John  Stuart  Mill  says 
it  is  the  function  of  government  to  do  what  it  can  to  redress 
the  inequalities  and  injustices  of  nature ;  but  in  this  case  we 
see  government  aggravating  these  inequalities  and  injustices, 

THE  TAXATION  OF  PERSONAL  PROPERTY   IN   OHIO. 

We  must  now  turn  our  attention  to  the  assessment  and 
tajiation  of  personal  property  in  the  state  of  Ohio.  We  iind 
in  this  stale  in  actual  practice  most  of  the  devices  which 
have  been  recommended  by  those  elsewhere,  who  are  pur- 
suing that  will-o'-the-wisp,  the  fair  and  equitable  taxation  of 
all  citizens  by  means  of  the  one  uniform  direct  tax  on  all 
property. 

Blanks  are  made  out  containing  lists  of  every  conceivable 
kind  of  persona!  property.  These  blanks  are  sent  to  every 
person  of  the  age  of  twenty-one  and  over,  who  must  answer 
every  question  relating  to  the  various  sorts  of  property 
which  he  owns,  or  which  are  in  his  keeping,  and  he  m 
do  this  under  oath  and  under  pain  of  heavy  penalt' 
These  lists  are  everything  that  could  be  desired,  and  in 


J 


EXPERIENCE   OF  OHIO. 


153 


inquisitorial  nature,  go  far  ahead  of  anything  of  the  kind 
we  have  ever  seen  in  the  assessment  of  an  income  tax.  I 
would  call  attention  lo  the  Revised  Statutes  of  the  state  of 
Ohio,  sections  2734  to  2746,  inclusive,  and  in  particular  10 
sections  2736  and  2737,  which  read  as  follows  —  I  will 
quote  them  to  show  that  they  go  as  far  as  law  well  can  go 
in  respect  to  inquisitorial  examination  into  private  affairs  :  — 

"  Sec.  2736.  Each  person  required  to  list  property,  shall, 
annually,  upon  receiving  a  blank  for  that  purpose  from  the 
assessor,  or  within  ten  days  thereafter,  make  out  and  deliver 
to  the  assessor  a  statement,  verilied  by  his  oath,  of  all  the 
persona]  property,  moneys,  credits,  investments  in  bonds, 
stocks,  joint  stock  companies,  annuities  or  otherwise,  in  his 
possession  or  under  his  control  on  the  day  preceding  the  sec- 
ond Monday  of  April  of  thai  year,  which  he  is  required  to 
list  for  taxation,  either  as  owner  or  holder  thereof  or  as  par- 
ent, husband,  guardian,  trustee,  executor,  administrator,  re- 
ceiver, accounting  officer,  partner,  agent,  factor,  or  otherwise. 

"  Sec.  2737.  Such  statement  shall  truly  and  distinctly  set 
forth,  first,  the  number  of  horses,  and  the  value  thereof; 
second,  the  number  of  neat  cattle,  and  the  value  thereof; 
third,  the  number  of  mules  and  asses,  and  the  value  thereof; 
fourth,  the  number  of  sheep,  and  the  value  thereof;  fifth,  the 
number  of  hogs,  and  the  value  thereof;  sixth,  the  number  of 
pleasure  carriages  (of  whatever  kind),  and  the  value  there- 
of; seventh,  the  total  value  of  all  articles  of  personal  prop- 
erty, not  included  in  the  preceding  or  succeeding  classes ; 
eighth,  the  number  of  watches,  and  the  value  thereof;  ninth, 
the  number  of  piano-fortes,  and  the  value  thereof;  tenth, 
the  average  value  of  the  goods  and  merchandise  which  such 
a  person  is  required  to  list  as  a  merchant ;  eleventh,  the 
value  of  the  property  which  such  a  person  is  required  to  list 
as  a  banker,  broker,  or  stock-jobber;  twelfdi,  the  average 


r 


TAXATION  AS  IT  IS. 


I 


value  of  the  materials  and  manufactured  articles  which  such 
person  is  required  to  list  as  a  manufacturer ;  thirteenth, 
moneys  on  hand,  or  on  deposit  subject  to  order ;  fourteenth, 
the  amount  of  credits  as  hereinbefore  defined ;  fifteenth,  the 
amount  of  all  moneys  invested  in  bonds,  stocks,  joint  stock 
companies,  annuities  or  oihenvise  ;  sixteenth,  the  monthly 
average  amount  or  value,  for  the  time  he  held  or  controlled 
the  same,  within  the  preceding  year,  of  all  moneys,  credits, 
or  other  effects,  within  that  time,  invested  in,  or  converted 
into  bonds  or  other  securities,  of  the  United  States,  or  of  his 
state,  not  taxed,  to  the  extent  he  may  hold  or  control  such 
bonds  or  securities  on  said  day  preceding  the  second  Mon- 
day of  April ;  and  any  indebtedness  created  in  the  purchase 
of  such  bonds  or  securities  shall  not  be  deducted  from  the 
credits  under  the  fourteenth  item  of  this  section ;  but  the 
person  making  such  statement,  may  exhibit  to  the  assessor 
the  property  covered  by  the  first  nine  items  of  this  section, 
and  allow  the  assessor  to  fix  the  value  thereof;  and  in  such 
case,  the  oath  of  the  person  making  the  statement  shall  be 
in  that  regard  only  that  he  has  ftilly  exhibited  the  property 
covered  in  said  nine  items," 

It  is  also  provided  that  any  person  required  to  list  prop- 
erty, who  shall  claim  that  there  is  no  taxable  property  within 
his  control,  which  he  owns  or  which  he  has  on  account  of 
others,  shall  be  required  to  make  oath  to  that  effect. 

It  must  also  be  added  that  these  laws  aje  actually  en- 
forced. The  blanks  are,  as  a  matter  of  fact,  distributed, 
they  are  filled  out,  and  they  are  returned. 

It  is  specially  required  that  the  personal  property  shall  be 
assessed  at  its  usual  selling  price. 

The  law  affords  every  facility  to  the  officers  intrusted  with 
the  administration  of  the  tax  laws  for  the  ascertainment  of 
property.     Indeed,  it  is  hard  to  see  how  law  could  go  fur- 


EXPERIENCE   OP  OHIO. 


ther.  1  refer  to  the  Revised  Statutes,  sections  2781  to  2797, 
inclusive.  Parlies  may  be  summoned,  ([uestioned  under 
oath ;  and  if  any  person  fails  to  appear,  or  appearing,  refuses 
to  testify,  "  he  shall  be  subject  to  like  proceeding  and  penal- 
lies  for  contempt  as  witnesses  in  actions  pending  in  the  Pro- 
bate Court."  The  costs  and  expenses  must  be  paid  by  ihe 
person  whose  property  is  under  examination,  if  he  has  made 
a  false  statement  to  escape  the  payment  of  taxes  in  whole  or 
in  part ;  but  if  the  statement  of  the  person  is  correct,  and  no 
intention  to  evade  llie  payment  of  taxes  shall  be  evident, 
the  costs  and  expenses  must  be  paid  by  the  county. 

If  a  person  refuse  to  list  or  swear  his  property  to  the 
assessor,  the  auditor  shall  add  fifty  per  ceni.  to  the  amount 
returned  or  ascertained,  and  the  amount  thus  increased  shall 
be  the  basis  of  taxation. 

The  powers  granted  by  the  laws  are  ample,  as  a  matter  of 
fact ;  but  the  officers  intrusted  with  their  administration  are 
afraid  to  be  over-diligent  in  the  discharge  of  duly,  knowing 
that  in  such  a  case  they  would  not  be  re-elected. 

Now,  what  is  the  result  of  .ill  this?  I  will  quote  the  state- 
ment of  the  governor  in  his  "Special  Message,"  dated  April 
6, 1887,  premising  only  that  all  infjuiries  made  on  the  ground 
lead  me  to  suppose  that  the  description  of  the  actual  situa- 
tion does  not  err  on  the  side  of  pessimism ;  — 

"  Personal  jiroperty  is  valued  all  the  way  from  full  value 
down  lo  nothing ;  in  fact,  the  great  majority  of  the  personal 
property  of  the  slate  is  not  returned,  but  entirely  and  fraudu- 
lently withheld  from  taxation.     Safar  as 
Personal  Property 

ia  concerned,  the  fault  is  chiefly  with  the  people  who  list 
their  property  for  taxation.  The  idea  seems  largely  to  pre- 
vail that  there  is  injustice  and  inequality  in  taxation,  and  that 


I 


TAXATION  AS  IT  IS. 

there  is  no  harm  in  cheating  the  state,  although,  to  do  so,  a 
false  return  must  be  made,  and  perjury  commitied- 

"This  offence  against  the  state  and  good  morals  is  too 
frequently  committed  by  men  of  wealth  and  reputed  high 
character,  and  of  corresponding  position  in  society. 

"  In  connection  with  the  recent  refunding  of  our  stale 
debt,  maturing  next  December,  it  was  disclosed  that  some 
of  the  most  prominent  and  highly  respected  men  of  our 
state  held  large  amounts  of  these  bonds,  without  having 
ever  paid  a  dollar  of  tax  on  the  same,  or  having  in  any 
manner  reported  them  for  taxation.  The  only  excuse  that 
has  been  suggested  for  this  is,  that  bonds  were  supposed  to 
be  non-taxable ;  but  it  is  difficult  to  be  patient  with  such  a 
claim  when  it  is  advanced  by  men  of  intelligence,  famihar 
with  our  constitution  and  its  requirement,  —  that  all  bonds, 
etc.,  shall  be  taxed. 

"  While  such  men  thus  disregard  and  violate  the  law,  it 
must  be  expected  that  our  tax  duplicate  will  continue  to 
decline,  instead  of  increase,  with  our  growth  and  develop- 
ment. The  harm  they  do  is  not  measured  by  the  amount 
of  money  of  which  they  deprive  the  state ;  their  example 
is  bad,  and  fraught  with  evil  to  the  whole  community." 

In  another  part  of  the  same  message,  the  governor  refers 
to  the  existing  lax  laws,  and  the  constitutional  requirements 
respecting  taxation,  in  these  words :  — 

Our  Tax  Laws, 
"  Our  tax  laws  are,  in  the  main,  perhaps  as  wise  as  they 
can  be  made  under  the  present  constitution.  If  it  were  not 
for  its  positive  injunctions,  much  might  be  said  in  favor  of 
exempting  from  taxation  the  bonds  of  our  state  and  munici- 
pal governments,  to  the  end  that  we  might  not  tix  our  credit 
and  drive  our  securities  away,  but  keep  them  at  home  and 


I 


EXPERIENCE   OF  OHIO. 


157 


pay  the  interest  upon  them  to  our  own  people.     But  that  is 
impracticable,  and  unnecessary  to  be  discussed. 

"The  requirement  of  the  constitution  is  that  all  bonds, 
stocks,  investments,  etc.,  as  well  as  real  property,  shall  be 
taxed  at  their  true  value  in  money.  Our  laws  have  been 
framed  with  a  view  to  securing  this  result,  but  it  is  manifest 
to  all  acquainted  with  our  resources  that  they  have  lament- 
ably failed ;  for  all  such  know  that  instead  of  a  grand  du- 
plicate of  ?i, 670,079, 868,  we  ought  to  have  one  of  at  least 
three  thousand  millions,  and  four  thousand  milhotis  would 
more  nearly  represent  the  taxable  wealth  of  the  state." 

The  following  extract  shows  a  decreased  valuation  of  per- 
sonalty during  a  period  of  increasing  wealth  :  "  In  1883  the 
value  for  taxation  of  the  personal  property  of  the  stale,  as 
shown  by  the  grand  duplicate,  was  $541,207,121.  In  18S4 
it  shrunk  to  $528,298,871,  and  for  1885  dwindled  again  to 
$509,913,986.  This  loss  has  been  made  up  largely  by  the 
steady  growth  of  the  valuation  of  real  estate,  < 
new  structures,  etc.,  but  the  loss  was  greater  than  the  in- 
crease last  year,  and  the  result  is  shown  in  the  fact  that  the 
grand  aggregate  of  all  property  of  the  stale,  both  real  and 
personal,  amounted  in  1885  to  but  81,670,079,868,  against 
81,673,774,081  for  1S84,  or  a  loss  of  83,694,213.  This 
indicates  that  our  wants  and  our  ability  to  meet  them,  are 
travelling  in  opposite  directions,  and  thai  unless  the  tax  rate 
or  the  valuation  of  property  is  increased,  the  casual  defi- 
ciencies will  continue  and  grow  larger  without  power  to  pro- 
vide for  them,  because  of  the  extreme  limitation  allowed  by 
the  constitution  having  been  reached  under  the  bill  above 
referred  to,  providing  for  the  issue  and  sale  of  the  bonds 
of  the  state  to  the  amount  of  $750,000,  to  meet  the  emer- 
gency now  upon  us." 


1J8  TilXA  TlOff  AS  TT  IS. 

These  statistics  show  that  the  chief  trouble  is  in  getting  i 
the  personal  property. 

I  conversed  with  many  reliable  citizens,  who  were  frank 
with  me  in  their  expression  of  opinion.  There  was,  natu- 
rally, a  wide  divergence  between  their  various  estimates ;  but 
nobody  claimed  that  more  than  a  comparatively  small  frac- 
tional part  of  the  personal  property  was  reached  in  the  larger 
cities,  while  it  was  generally,  if  not  unanimously,  held  that 
the  larger  the  city  the  smaller  the  proportion  of  personalty 
reached  — as,  indeed,  always  happens.  One  successful  busi- 
\  ness  gentleman,  well  acquainted  with  different  parts  of  the 
I  state,  estimated  the  personal  property  taxed  in  Columbus  at 
from  ten  to  twenty  per  cent,  of  the  whole,  and  the  amount 
reached  in  Cincinnati  at  a  considerably  smaller  percentage. 
On  the  other  hand,  I  was  informed  that  in  Cambridge, 
Ohio,  a  city  of  a  few  thousand  inhabitants  only,  a  far  larger 
proportion  of  the  personalty  was  reached. 

I  conversed  with  a  gentleman  in  Columbus,  who,  from 
practical  experience,  probably  knows  as  much  about  taxa- 
tion as  any  one  in  the  state  of  Ohio,  and  was  told  that 
existing  laws  signally  failed  to  reach  large  masses  of  prop- 
erty ;  that  the  burdens  of  government  rested  on  the  poorer 
and  middle  classes  of  society,  and  that  the  wealthy  escaped. 

A  lawyer  of  standing  in  Columbus,  who  holds  estates  in 
trust  for  several  parties,  says  that  whenever  he  goes  to  the 
tax  office,  to  pay  taxes,  he  feels  capable  of  committing  rob- 
bery, arson,  and  murder ;  because  he  is  obliged  to  pay  taxes 
on  the  full  value  of  estates  of  two,  three,  and  four  thousand 
dollars,  belonging  to  little  orphan  children,  whereas  he  sees 
wealthy  clients  paying  on  ten  or  fifteen  per  cent,  of  what  he 
knows  they  are  worth. 

.\fter  a  lengthy  conversation  with  a  gentleman  who  was 
once  an  official,  and  had  served  long  in  one  of  the  tax  de- 


EXPERIENCE   OF  OHIO. 


159 


partments  of  Ohio,  I  said, ''  It  seems  to  me,  from  what  you 
say,  there  is  not  a  wealthy  man  in  the  state  of  Ohio  who  is 
not  a  perjurer."  He  replied,  "  It  is  true."  I  do  not  wish  to 
make  any  assertion  of  the  kind;  I  simply  quote  what  I 
heard,  as  an  evidence  of  widespread  demoralization. 


CHAPTER   V. 


EXPERIENCE   OF   GEORGIA. 

SO  much  attention  has  been  given  to  Ohio  because  the 
principles  embodied  in  our  system  of  taxation  seem  to 
be  as  thoroughly  and  vigorously  carried  out  there  as  else- 
where. It  is  well,  however,  to  examine  the  experience  of 
other  slates  where  similar  systems  of  taxation  obtain,  in  order 
that  we  may  the  better  be  able  to  determine  whether  the 
failure  of  the  syslem  in  Ohio  and  Maryland  is  due,  on  the 
one  hand,  to  certain  local  peculiarities  or  to  imperfections 
in  the  details  of  the  law,  or  in  the  administration  o(  the  law  ; 
or  whether,  on  the  other  hand,  the  failure  of  the  system 
is  due  to  the  nature  of  the  system  itself.  I  accordingly 
decided  to  visit  Georgia,  a  typical  and  progressive  Southern 
slate,  and  to  examine  the  practical  workings  of  our  systent 
in  that  commonwealth. 

The  main  feature  of  the  tax  system  in  Georgia  is  the  one  i 
uniform  tax  on  all  property,  real  and  personal,  and  th,"  reve-  \ 
nue  from  this  tax  defrays  a  greater  part  of  all  state  and  local  1 
expenses  than  all  other  sources  of  revenue  put  together. 
There  are  stringent  provisions  for  the  enforcement  of  the 
law  which  need  not  be  described  at  length.     All  property  is 
assessed  yearly  by  tax-payers,  and  the  returns  are  given  to  the 
tax-receivers  of  the  various  counties.     These  tax-receivers 
must  examine  the  returns,  and  receive  them  only  when  appar- 
ently satisfactory ;  all  returns  are  made  by  filling  out  blanks 
containing  minute  specifications  designed,  on  the  one  band, 
to  aid  the  tax-payei  in  making  a  full  return  of  all  his  prop- 


EXPERIENCE   OF  GEORGIA. 


161 


City;  on  the  other,  to  make  concealment  difficult.  The 
statute  provides  the  questions  which  must  be  asked  in  the 
blank,  and  there  are  thirty-six  distinct  questions,  many  of 
them  containing  several  sub- questions,  If  the  expression  may 
be  used.  The  following,  for  example,  is  regarded  as  one 
question ;  '■  How  many  acres  of  land,  except  wild  lands,  do 
you  own,  or  of  how  many  are  you  the  holder,  either  as  par- 
ent, husband,  trustee,  executor,  administrator,  or  agent; 
where  is  the  same  located  by  number,  district,  and  section ; 
wiiat  is  the  value  thereof?  " 

The  following  are  a  few  other  questions  which  are  asked  ;  — 

"  How  many  shares  in  the  bank  of  which  you  are  presi- 
dent, and  what  is  the  value  thereof?  " 

"  How  much  capital  have  you  in  the  bonk  of  which  you 
are  president,  and  what  is, the  value  thereof?" 

"  How  much  capital  have  you  in  the  bank  of  which  you 
are  president,  as  a  sinking  fund,  or  sur])lus  fund,  and  not 
represented  in  the  value  of  ihe  shares  ?  " 

"  How  much  property,  real  and  personal,  does  the  bank 
of  which  you  are  president,  own,  not  used  in  the  banking 
business,  and  what  is  the  value  thereof?  " 

"  The  value  of  merchandise  of  all  kinds  on  hand  ?  " 

"  How  much  capital  invested  in  bonds,  excejjt  bonds  of 
the  United  States,  and  such  bonds  of  this  state  as  are  by  law 
exempt  from  taxation?" 

"What  is  the  value  of  your  kitchen  furniture?" 

"The  value  of  your  gold  watches?" 

"The  value  of  your  silver  watches?" 

Finally,  after  many  more  questions,  which  would  seem  lo 
include  everything,  this  question  is  asked  ;  — 

"  The  value  of  all  other  personal  property  not  herein  men- 
tioned ?  " 

The  statute  also  describes  personal  property,  and  these 


16Z  TjiXA  TJON-  ^S  IT  IS. 

are  the  words  used  :  "Be  it  further  enacted.  That  personal 
property  shall  be  construed,  for  purposes  of  taxation,  lo  in- 
clude all  goods,  chattels,  moneys,  credits  and  effects,  what- 
soever they  may  be ;  all  ships,  boats,  and  vessels  belonging 
to  the  inhabitants  of  this  stale,  whether  at  home  or  abroad, 
and  all  capital  invested  therein ;  all  money  within  or  without 
the  state,  due  the  person  to  be  taxed ;  all  stocks  and  si 
rities,  whether  in  corporations  within  this  state,  or  in  other 
states,  owned  by  citizens  of  this  state,  unless  exempt  by  the 
laws  of  the  United  States,  or  of  this  state." 

The  oath  which  is  attached  to  the  lists  to  he  filled  out  by 
the  tax-payers  is  prescribed,  and  is  as  follows :  "I  do  si 
emnly  swear  that  T  have  carefully  read  (or  have  heard  read), 
and  have  duly  considered  the  questions  propounded  in 
foregoing  tax-Ust,  and  that  the  value  placed  by  me  on  the 
property  returned,  as  shown  by  said  list,  is  at  the  true  market 
value  thereof;  and  I  further  swear  that  I  returned,  for  the 
purpose  of  being  taxed  thereon,  every  species  of  property 
that  I  own  in  my  own  right,  or  have  control  of,  either  a 
agent,  executor,  administrator,  or  otherwise ;  and  that,  in 
making  said  return  for  the  purpose  of  being  taxed  thereon, 
1  have  not  attempted,  either  by  transferring  my  property,  » 
by  any  other  means  sought  to  evade  the  laws  governing  tax- 
ation in  this  state,  1  do  further  swear  that  in  making  said 
retnm,  1  have  done  so  by  estimating  the  true  worth  and 
value  of  every  species  of  property  contained  therein." 

This  oath  must  be  subscribed  by  the  persons  making  the 
return,  and  the  administradon  and  taking  of  the  oath  must 
be  attested  by  the  receiver  of  tax  returns. 

An  act  was  passed  in  1S74,  entitled  an  act  to  provide  for 
the  correct  assessment  of  taxable  property  in  this  state, 
which  is  worthy  of  notice,  and  in  its  aim  to  secure  the  co- 
operation of  representative  citizens  with  tax  officials,  it  la 


EXPERIENCE   OF  GEORGIA. 


163 


undoubtedly  a  move  in  the  right  direction,  whether  or  not 
this  may  be  precisely  the  right  method  of  obtaining  the 
desired  end.  It  is  provided  in  this  act  that  the  tax-receiver 
in  each  county  must,  at  the  fall  term  of  the  Superior  Court 
in  his  county,  lay  his  returns  for  that  year  before  the  grand 
juiy,  whose  duty  it  is  then  to  examine  the  same,  and  to 
assess  at  its  true  value  all  propeny  which  they  may  find 
undervalued.  This  corrected  digest  is  the  tax- receiver's 
guide  for  the  succeeding  year,  and  whenever  any  person 
returns  his  property  at  a  valuation  lower  than  that  of  the 
digest,  its  true  value  is  ascertained  by  arbitration  in  this 
wise :  The  tax-payer  appoints  an  arbitrator,  the  tax-receiver 
likewise  appoints  an  arbitrator,  and  these  two  elect  an  um- 
pire ;  to  these  the  question  of  valuation  is  referred,  and  the 
decision  of  these  three  is  final. 

The  system  of  taxation  for  the  state  of  Georgia  is  placed 
under  the  supervision  of  the  Comptroller- General,  who  is- 
sues "  Instructions  "  to  the  tax- receivers,  those  officials  con- 
cerned with  assessment,  and  also  to  the  tax-collectors  of  the 
state,  informing  them  of  the  nature  of  their  duties,  describ- 
ing the  precise  method  of  procedure  on  their  part,  in  the 
fulfilment  of  their  several  duties,  and  pointing  out  to  them 
pitfalls  for  the  unwary  or  inexperienced.  I  have  read  these 
"Instructions"  issued  for  the  year  1886,  by  Hon.  W.  C. 
Wright,  Comptroller-General,  and  can  testify  that  they  give 
evidence  of  the  fact  that  they  were  prepared  by  an  alert, 
experienced,  and  capable  public  officer,  conscientious  to  the 
state  in  the  discharge  of  the  functions  of  his  office.  It 
would  seem  that  the  plan  pursued  in  Georgia  of  placing  the 
entire  system  of  state  and  county  taxation  under  the  general 
supervision  of  one  man,  and  making  him  responsible  for  the 
administration,  has  in  it  much  that  is  worthy  of  commenda- 


TAXATION  AS  IT  IS. 


-caching      ^H 

for  the       ^^k 
the  fact       ^1 


But  does  Georgia  succeed  better  than  Ohio  in 
all  propeny?     I  doubt  it. 

The  Comptroller- General,  in  his  "  Instructions 
year  of  1886,  repeatedly  has  occasion  to  point  out  the 
that  a  large  portion  of  property  either  entirely  escapes  tax- 
ation or  is  not  assessed  at  its  true  value.  I  will  quote  a  few 
sentences  taken  from  different  parts  of  these  "  Instructions  "  : 
"  Our  lands  are  worth  a  great  deal  more  than  the  same  are 
being  returned  for  taxation,  and  you  cannot  be  too  careful 
in  the  discharge  of  the  duties  imposed  upon  you  in  receiv- 
ing their  returns." 

"CrrV  AND  TOWN   PROPERTY. 

"There  is  very  just  complaint  against  the  custom  or 
practice  of  lax-payers  returning  this  class  of  property  to 
the  receiver  of  tax  returns,  for  the  state  and  county,  at  a 
very  much  lower  valuation  than  the  same  property  is  re- 
tmned  to  the  corporate  authorities  for  taxation.  It  must  be 
manifest  to  every  one  that  property  is  worth  as  much  when 
returned  for  taxation  by  the  stale  or  county  as  when  returned 
to  be  taxed  by  the  cities.  I-ook  closely  to  the  returns  of 
this  species  of  property,  and  endeavor  to  correct  the  evO 
complained  of." 

"notes,  accounts,  bonds,  merchandise. 
"  From  a  carefid  examinalion  of  the  digest  of  file,  in  this 
office,  it  is  evident  to  me  that  such  property  is  not  returned 
as  it  should  be,  and,  as  an  officer  whose  duty  it  is  to  see  that 
all  property  is  returned,  I  ask  of  you  to  give  this  your  care- 
ftil  attention."  "  All  notes,  accounts,  and  other  evidences  of 
debt  are  taxable,  and,  hke  other  property,  at  their  market 
value.  It  is  sometimes  the  case  that  persons  owning  this 
class  of  property  deed  or  convey  it  to  citizens  of  other 


J 


E.XPERmNCE   OF  GEORGIA.  165 

States  or  remove  same,  in  order  to  avoid  paying  taxes  due 
on  it.  Such  deeds  and  conveyances  are  illegal  and  void 
(see  Code,  section  813  .  .  .),  and  the  property  so  deeded 
or  conveyed  must  be  returned  for  taxation." 

"A  great  many  merchants  and  other  citizens  of  this  state 
have  borrowed  money  on  bonds,  notes,  and  other  evidences 
of  debt  owned  by  them,  and  have  deposited  such  bonds, 
notes,  etc.,  as  collateral  security  with  the  persons  from  whom 
they  have  made  such  a  loan,  and  think  that  said  notes, 
bonds,  etc.,  being  out  of  their  hands  on  April  ist,  such  prop- 
erty should  not  be  returned  by  them ;  this  is  not  true." 

"  I  desire  to  invite  your  attention  especially  to  the  returns 
of  merchandise.  An  examination  of  the  returns  of  this  item 
of  property  in  the  state  discloses  the  fact  that  at  least  fifty 
per  cent,  of  this  class  of  property  is  not  returned  for  taxation 
a\  all.  I  am  quite  sure  that  a  very  Urge  percentage  of  the 
watches,  jewelry,  pianos,  organs,  etc.,  owned  in  our  state 
are  not  returned  at  anything  like  their  market  value," 

The  Comptroller- General,  in  conclusion,  again  takes  oc- 
casion to  remind  the  receivers  of  tax  returns,  that  it  is 
contrary  to  "  law  to  allow  any  one  to  make  a  return  of  his 
property,  without  administering  the  oath  and  propounding 
the  questions  instructed  from  this  office." 

I  visited  Savannah,  Atlanta,  and  AugusL-t,  and  conversed 
with  public  officers  as  well  as  with  many  citizens  of  charac- 
ter and  standing  in  their  respective  communities,  and  the 
unanimous  testimony  of  all  who  had  given  this  subject  any 
careful  attention,  more  than  conrirraed  the  quotations  from 
the  Comptroller- General  in  regard  to  the  inadequate  nature 
of  the  returns  of  tax-payers, 

I  conversed  with  a  gentleman  in  Savannah,  who  is  prob- 
ably as  well  acquainted  with  the  actual  workings  of  the  tax 
Iaw3  there  in  force  as  any  resident  of  the  city,  and  he  told 


TAXATION  AS  [T  tS. 

me  thai  they  could  not  reach  the  personal  property ;  that 
millions  of  dollars  escaped.  "  A  person  has  bonds  and  does 
not  return  them  ;  but  what  are  you  going  to  do  about  it  ?  " 
asked  this  gentleman,  "  If  he  does  not  return  them,  must 
he  not  take  a  false  oath  and  perjure  himself? "  I  replied..  _ 
"  Yes,"  answered  he ;  "  and  it  is  unfortunately  a  thing  which  I 
b  done  every  day." 

I  was  told  that  people  with  elegantly  furnished  houses 
frequently  valued  their  furniture  at  S500  or  S600,  although 
if  the  furniture  were  put  up  at  auction,  that  In  each  room 
would  bring  as  much.  But  I  was  again  asked  ;  "  What  are 
you  going  to  do  alxjut  it?  We  cannot  well  go  into  people's 
houses  and  examine  their  furniture.  A  gentleman  has  been 
appointed  by  the  City  Council  who  puts  up  the  valuation  o( 
personal  properly,  if  there  seems  to  be  a  reason  for  it,  and  J 
Ji.ooo.ooo  has  lliis  year  been  added  to  the  assessed  valua-  ' 
tion  of  personalty ;  but  after  all,  the  burden  of  proof  rests 
on  the  city.  We  cannot  raise  the  valuation  without  a  reason 
therefor." 

Another  gentleman,  with  almost  equal  facilities  for  care- 
ful observation,  told  me  that  no  one  paid  any  attention  to 
the  personal  properly  tax.  "There  is,  for  example,"  said 
he,  "  a  lax  on  watches,  but  there  are  not  ten  men  in  Savan- 
nah who  own  watches."  This  last  was  naturally  said  laugh- 
ingly.' 

The  valuation  of  property  in  Savannah  is  acknowledged 
to  be  low  because  the  valuation  for  municipal  purposes  is 
taken  as  a  basis  for  state  and  county  taxation,  and  the  resi- 
dents say  that  if  the  assessed  valuation  is  raised,  they  will 

•  Through  ihe  kindnras  of  Rol>crt  T.  IJeehtrt.  E«|.,  Gty  Compltol- 

ler  of  Fhiladelphia,  I  im  enabled  \o  give  striking  iUustntion  of  tke 

fiiltlil]'  of  Ihe  Utempl  lu  \tx  everything.     There  U  ■  slale  lax  of  one 

ckch  sold  **Ich,  »f  sc^'cn'r-li''^  cenis  00  each  silvct  vUch, 


EXPERIENCE   OF  GEOKGIA. 

bear  more  than  their  fair  share  of  the  burdens  of  county 
and  state,  because  properly  elsewhere  is  not  assessed  at  its 
full  value. 

Savannah  is  situated  in  Chatham  County,  and  one  of  the 
gentlemen  connected  with  the  administration  of  the  tax  laws 
fur  that  county  and  for  the  state,  told  me  that  about  1873 
the  assessed  valuation  of  property  in  Savannah  was  some 
twenty-six  millions  of  dollars,  and  that  the  rate  of  taxation 
in  the  city  was  one  per  cent.,  but  that  to  escape  paying  so 
much  to  the  county  and  to  the  state,  they  reduced  their 
assessed  valuation  to  the  neighborhood  of  twelve  millions 
and  raised  their  local  rate  to  three  per  cent. 

One  feature  of  taxation  in  Savannah  is  unique  for  an 
American  city,  and  deserves  notice.  It  has  long  been  the 
practice  in  Savannah  to  tax  personal  property  and  real 
estate  at  two  different  rates.  The  tax  ordinance  for  1887 
fixes  the  rate  of  taxation  on  real  estate  at  two  and  one- 
eighth  per  cent,  of  value,  and  on  personal  property  at  one- 
half  of  one  per  cent.  Shares  in  banks  and  banking  associa- 
tions alone  are  excepted.  The  rate  of  taxation  on  shares 
in  banks  doing  bnsiness  in  Savannah  is  lixed  by  state  law  at 
three-tenths  of  one  per  cent.,  whether  the  owner  of  such 
shares  resides  in  the  city  or  elsewhere.     I  was  told  by  the 

in<l  fifty  cents  un  every  olher  watch  carried  in  Philadelphia.  The  fol- 
luwing  labte  ibuwB  ihe  number  of  watches  of  each  ilncripliun  taxed 
in  thai  dt;  al  neaily  a  million  af  inhabilanu,  in  the  years  iSSj,  1^84, 
I88S  =  — 


1883 

1884 

-S85 

'4.5  <  5 
375 
19 

18,509 

675 
74 

18,390 
545 
55 

SUyct  watches 

168  TAXATION  AS  IT  IS. 

head  of  the  tax  depaitmeat.  Major  Hardee,  that  in  hia 
opinion  the  lower  rate  of  taxatioo  produced  as  large  a 
revenue  as  a  higher  rate  would.  It  is  not  claimed,  how- 
ever, that  the  results  are  entirely  sitisfactory,  for,  as  has 
already  been  mentioned,  large  amountt  of  personal  prop- 
erty escape.  The  assessed  raluatioo  for  1 886  as  il  appears 
on  the  city  treasurer's  books  was  as  follows :  — 


WBC«KI*G«. 

^,,^0,.*. 

Slock  in  trad«      ,    . 
PenoDil     ,     .    .    . 
Banking  capital  .    . 
Shipping     .... 

•'3,343.631 
*.34'.o46 
3.521.S2S 
1.898.891 

1.346.350 

31 

1 

1 
ft 

1 

«a83,S5«  18 
".70s  33 
17.607  63 
5.69667 
6,73'  75 

Toul 

f22,45I,444 

»32S.Z93  46 

It  is  simply  impossible  to  tell  what  ought  to  be  the  exact 
proportion  between  real  and  persona!  properly  ;  biit  as  it  is 
a  fact  beyond  controversy  that  large  amounts  of  personal 
property  escape  taxation,  it  is  manifest  that  it  ought  to  be 

L different  from  what  it  actually  is  in  Savannah.  No  one,  so 
far  aa  I  know,  who  has  ever  looked  into  the  matter,  claiou 
that  the  amount  of  personal  property  in  a  modern  city  is 
less  in  value  than  the  real  estate  ;  and  if  we  assume  that  they 
are  equal  in  Savannah  we  can  see  how  far  the  Savannah 
S)-stem  fails  of  reaching  all  personal  property. 
All  the  time  I  was  in  Georgia  I  saw  no  one  who  claimed 
that  property  in  any  part  of  the  state  was  assessed  at  its 


EXPERIENCE   OF  GEORGIA, 


169 


true  value,  though  I  understand  that  the  assessments  on 
some  property  in  Atlanta  were  high ;  yet  every  one  takes 
an  oath  to  return  property  at  its  true  value  ! 

Again  I  remark  that  nothing  is  further  from  my  thoughts 
than  to  make  an  attack  on  the  people  of  any  state,  for  I 
simply  wish  to  show  the  natural  consequences  of  our 
existing  methods  of  assessing  and  taxing  property. 

It  is  not  necessary  to  add  further  testimony  from  Atlanta 
and  Augusta,  as  it  would  be  scarcely  more  than  a  repetition 
of  what  has  already  been  said. 


1 


CHAPTER  Vr. 


EXPERIENCE  OF  WISCONSIN  AND  WEST  VIRGINIA. 
I.    WISCONSIN. 

Taxation  of  Railroads. 

I  WENT  to  Wisconsin  to  ascertain  the  experience  of  a 
new  and  progressive  state  in  the  Northwest,  in  respect 
to  taxation.  A  great  part  of  the  revenue  of  this  slate  is 
derived  from  a  license  tax  on  steam  railroads,  and  it  was 
proposed  to  raise  all  the  revenues  for  state  purposes  from 
this  tax  in  the  near  future.  This  method  of  taxing  railroads 
yielded  large  returns,  and  seemed  to  give  very  general 
satisfaction.  My  attention  was  frequently  called  to  it,  and 
it  was  especially  commended. 

The  license  fees  in  Wisconsin  are  as  follows  :  — 

"  I.  Four  per  centum  of  the  gross  earnings  of  all  rail- 
roads except  those  operated  on  pile  and  jiontoon,  oi  pon- 
toon bridges,  whose  gross  earnings  equal  or  exceed  three 
thousand  dollars  per  mile  per  annum  of  operated  railroad. 

"  1.  Five  dollars  per  mile  of  operated  railroad  of  all 
railroads  whose  gross  earnings  exceed  one  thousand  five 
hundred  dollars  per  mile  per  annum,  and  are  less  than 
three  thousand  dollars  per  mile  per  annum  of  operated  road, 
and  in  addition  two  per  centum  of  their  gross  earnings  in 
excess  of  fifteen  hundred  dollars  per  mile  per  annum. 

"  ,v  Five  dollars  per  mile  of  operated  road  hv  a"  coin- 
panics  whose  eross  eamines  are  less  than  fifteen  hundred 
dollars  per  mile  per  annum. 


EXPERIENCE   OF   WlSCONStN. 


171 


"  4.  Two  per  centum  of  the  gross  earnings  of  all  railroads 
which  are  operated  upon  pile  or  pontooa  bridges,  which 
gross  earnings  shall  be  returned  as  to  such  parts  thereof  as 
are  within  the  state. 

"  One-half  of  such  license  fee  shall  be  paid  at  the  time 
the  license  so  issues,  and  one-half  on  or  before  the  tenth 
day  of  August  in  each  year." 

The  railroads  resisted  the  lax  at  first,  as  corporations  al- 
ways do  new  taxes,  until  they  perceived  that  it  was  impossi- 
ble to  escape  its  payment,  and  since  tliat  time  they  have  given 
little  trouble.  The  license  fee  is  regarded  as  a  payment  for 
a  privilege,  and  perhaps  may  more  properly  be  so  regarded 
than  as  a.  real  tax,  for  a  regular  tax  would  not  necessarily 
be  excluded  hereby.  In  Baltimore,  Maryland,  for  example, 
Ucense  fees  are  paid,  and  regular  taxes  in  addition,  by  street- 
car lines.  The  advantages  of  deriving  a  large  revenue  in 
this  way  are  obvious.  Railroad  corporations  are  too  power- 
fill  for  local  political  units  to  handle,  and  for  these  to 
attempt  to  tax  them  leads  to  friction  and  comiplion.  States 
are  really  not  powerful  enough,  but  they  are  more  nearly 
equal  to  the  great  railroad  corporations  in  strength,  and  it 
is  in  every  way  desirable  to  turn  al!  vast  corporations,  whose 
operations  extend  throughout  the  state,  over  lo  the  state 
exclusively  for  taxation.  Insurance  companies  and  telegraph 
companies,  are  also,  in  Wisconsin,  taxed  by  the  slate  ;  but 
inadequate  revenue  is  derived  from  telegraphs  and  tele- 
phones, and  attention  has  been  called  to  the  propriety  of 
bringing  sleeping-car  companies,  operating  in  Wisconsin, 
under  the  general  rule,  and  placing  a  hccnse  tax  on  them. 

Since  1883  these  special  sources  have  been  so  productive 
that  there  has  been  no  state  tax  for  genera!  purposes.  A 
tax  of  oae  mill  on  the  dollar,  or  ten  cents  on  the  hundred 


172 


TAXATION  AS  IT  IS. 


dollara,  is  levied  for  school  purposes,  and  a.  tax 
on  the  hundred  dollars  for  the  state  university. 

The  railroad  companies' license  fees  for  i8f 
yielded  ^1,481,066.56  out  of  total  receipts  for  the  state  of 
}a, 9 63,5 38 ,88,  or  about  fifty  per  cent,  of  all  ri 

77ie  Genera/  Property  Tax. 

The  oldest  source  of  revenue,  and  until  the  present  time 
an  important  one  for  the  state,  and  still  the  chief  one  for  all 
local  purposes,  is  the  one  uniform  tax  on  all  property,  real 
and  personal.  There  is  nothing  especially  noteworthy  to  be 
said  about  the  experience  of  Wisconsin  with  this  tax,  as  il  is 
similar  to  that  of  Ohio  and  Georgia,  although  the  adm 
tration  of  the  laws  does  not  appear  to  be  nearly  so  strict,  and 
the  blanks  with  minute  specifications  are  not  required  to  be 
filled  in  by  each  tax-payer  under  oath. 

Personalproperty,  it  was  generally  said — indeed,  I  remem- 
ber no  contradiction  of  the  statement — was  not  reached; 
especially  not  in  large  places,  and  still  more  especially  not  ii 
the  case  of  men  of  large  means.  I  was  told  that  in  a  small 
city  like  Ripon,  most  of  the  personal  property  was  reached, 
in  Madison  less,  and  in  Milwaukee  still  less.  This  is  in  keep-  ' 
ing  with  what  I  found  everywhere.  The  great  cities  escape 
the  personal  property  lax  to  a  more  considerable  extent  than 
the  smaller  cities  and  villages,  and  still  more  than  the  rural 
districts. 

A  gentleman  of  prominence,  in  a  city  in  Wisconsin,  which 
I  will  not  name,  and  aji  office-holder  under  the  present  fed- 
eral administration,  said  to  me ;  "  You  see  in  me  a  monu- 
ment of  the  iniquity  of  our  present  system  of  taxation.  \Vhen 
I  was  a  poor  and  struggling  young  man,  with  five 
hundred  dollars*  worth  of  personalty,  I  paid  on  all  that  I 
bad  j  but  now  that  I  really  have  something,  I  keep  still  and 


EXPERIENCE   OF  WEST   VmClNlA.  173 

pay  taxes  only  on  part  of  my  property.  Indeed,  when  I 
think  about  taxation  in  our  states  and  cities,  I  feel  like  turn- 
ing anarchist  and  blowing  things  up  with  dynamite." 


I  will  quote  a  few  passages  from  the  "  Preliminary  Re- 
port of  the  West  Virginia  Tax  Commission,"  made  in  1884, 
which  have  a  bearing  on  the  points  under  discussion,  and 
which  confirm  the  resuhs  of  my  own  observations, 

'    Those  Evading  Taxes  are  Generally  Best  Able  to  Pay  them. 

"  For  the  purpose  of  suggestion,  and  by  way  of  illustration, 
tax-payers  may  be  divided  into  two  classes.  One  class  con- 
stantly schemes  to  shift  off  on  a  neighbor  some  burden  which 
they  themselves  ought  to  carry ;  the  other  class,  unskilled  in 
the  practices  of  evasion,  submit  to  whatever  is  measured  out 
to  them  by  the  recognized  authorities,  and  pay  whatever  is 
demanded.  The  one  class  is  shrewd,  enterprising,  and  adroit ; 
the  other  is  content  to  accumulate  property  siuwly,  honestly, 
and  by  hard  labor.  It  is  the  very  first  duty  of  a  government 
so  to  shape  its  tax  laws  that  this  second  class  will  be  fairly 
dealt  with ;  it  is  largely  composed  of  those  helpless  and 
unobtrusive  persons,  who,  Ireniling  the  humbler  walks  of  life, 
make  but  little  noise  in  the  worlil,  and  are  seldom  able  to 
assert  or  defend  their  personal  rights.  Again,  the  first  class, 
by  reason  of  their  activity  and  shrewdness,  have  more  abil- 
ity than  the  other  class  to  carry  their  full  proportion  of  a 
common  burden.  ...  It  is  a  primary  principle  that  the 
subjects  of  a  state  ought  to  contribute  tbwards  the  support 
of  the  government,  as  nearly  as  possible  in  proportion  to 
their  respective  abilities  :  but  't  will  be  seen  before  these 
nports  are  concluded,  that  in  West  Virginia  almost  the  re- 


H      nports 


TAXATION  AS  IT  IS. 


verse  is  the  case,  and  that  a  man  of  small  means  pays,  as  it 
rule,  more  in  proportion  than  a  man  of  large  means. 

"  The  statistics  bearing  on  this  point  will  scarcely  be  cred- 
ited by  persons  who  have  not  investigated  the  subject,  and 
they  exhibit  a  condition  of  things  that  ought  not  to  be  tol- 
erated. It  will  be  found,  for  instance,  that  a  house  and  lot 
worth  $800  is  valued  at  $700,  while  a  house  and  lot  worth 
?8ooo  is  valued  at  S4000 — in  the  one  case  at  seven- eighths, 
and  in  the  other  at  one-half;  that  is  to  say,  the  owner  of  the 
small  property  has  Jioo  untaxed,  and  the  owner  of  the  large 
property  has  forty  times  that  amount  untaxed.  Again,  when 
a  person  dies,  his  entire  personal  estate  is  listed  and  valued 
by  the  appraisers,  whose  appraisement  is  recorded  by  the 
county  clerk.  By  comparing  a  number  of  these  appraise- 
ments with  the  tax  assessments  made  next  prior  to  the  death 
of  such  person,  we  find  that  a  man  with  a  personal  estate 
valued  immediately  after  his  death  at  8200,  was  rated  imme- 
diately before  his  death  at  %\  78 ;  while  a  man  whose  estate 
is  appraised  at  ^£5000  was  rated  at  only  £1500;  that  is  to 
say,  if  the  man  of  small  means  was  rated  in  the  same  pro- 
portion as  the  man  of  larger  means,  he  would  pay  taxes  on 
only  S60,  whereas  he  now  pays  on  1R178. 

"At  present  all  the  taxes  from  invisible  property  come 
from  a  few  conspicuously  conscientious  citizens,  from  widows, 
executors,  and  from  guardians  of  the  insane  and  infants ;  in 
fact,  it  is  a  comparatively  rare  thing  to  find  a  shrewd  trader 
who  '  gives  in  '  any  considerable  amount  of  notes,  stocks,  or 
money ;  the  truth  is,  things  have  come  to  such  a  condition 
in  West  Virginia  that,  as  regards  paying  taxes  on  this  class 
of  property,  it  is  almost  as  voluntary  and  is  considered  pretty 
much  in  the  same  light  as  donations  to  the  neighborhood 
church  or  Sunday-school, 

"A  merchant's  stock  of  goods  was  worth   $15,000;   he 


EXPERIENCE   OF   WEST    VIRGINIA. 


175 


'  to  the  assessor  at  ^2500,  and  this  conversation 
n't  take  this  valuation  ;  the  law  requires 


'gave  it  in 
occurred : 

"  Assessor. 
me  to  swear  you.' 

"  Merchant.  '  If  you  swear  me,  I'll  vote  against  vou  next 
time.' 

"  Mr,  A.  paid  JSoo  for  his  piano,  and  listed  it  as  worth 
ttoo.    Mis,  S,  paid  $2$o,  and  listed  here  at  2250. 

"  It  is  useless  to  continue  these  examples  )  they  are  only 
too  familiar  to  every  citizen.  It  is  idle  to  expect  a  man  to 
meet  the  assessor  in  a  proper  spirit,  when  he  feels  that  he  is 
subjected  to  the  alternative  of  either  telling  a  falsehood  or 
being  swindled.  If  I  am  compelled  to  pay  a  tax  which  be- 
longs to  ray  neighbor,  1  am  swindled,  and  I  feel  the  injustice 
as  much  as  if  robbed  on  the  public  highway. 

"Under  the  present  system  (probably)  four-fifths  of  the 
invisible  property  is  not  listed,  and  of  the  visible  property 
that  is  on  the  assessor's  books  (probably)  one-half  is  as- 
sessed at  forty  per  cent-  lower  than  the  other  half. 

"We  frequently  hear  the  remark ;  '  If  a  man  is  ten  times 
richer  than  I,  he  ought  to  pay  ten  times  as  much  tax ; 
whereas,  the  richer  a  man  is,  the  less  is  his  tax  in  propor- 
tion to  his  property.' 


CHAPTER  vn. 


I 


I 


IET 
J  c 


EXPERIENCE   OF   HEVf  YORKl 

ET  US  tura  to  New  York  state,  where  full  returns  are 
I  easily  accessible.  For  many  years  attention  has  been 
called,  by  commissions  and  administrative  officers,  to  the 
defective  assessment  of  personal  property  in  that  common- 
wealth ;  but  what  have  been  the  results  of  their  admonitions? 
While  no  one  doubts  that  personal  property  in  that  state  has 
been  increasing  steadily,  and  with  great  rapidity,  there  has 
been  a  constant  decline  in  the  proportion  of  public  burdens 
home  by  personalty.  "In  1869  real  estate  contributed 
seventy-eight  per  cent,  of  the  public  revenue,  and  personal 
property  paid  twenty-two  per  cent. ;  while  in  1879  real  estate 
was  made  to  pay  eighty-seven  and  eight-leaths  per  cent.,  and 
personal  property  only  twelve  and  two-tenths  per  cent,  of  the 
whole  lax.  It  would  be  difficult  to  show  that  the  value  of 
personal  property  has  not  increased  lo  a  larger  extent  in  the 
past  ten  years  than  real  estate." ' 

This  decrease  in  the  assessed  valuation  of  personalty  has 
continued  from  1878  to  18S0 ;  the  decrease  in  round  ni 
bcrs  was  thirty  millions  of  dollars  ;  from  1880  to  1881,  there 
was  an  increase  of  twenty-nine  millions,  which  was,  howe 
more  than  coimlerbalanced  by  a  decreased  valuation  of 
nearly  thirty-six  millions  in  1S81. 

Tlw  New  York  assessors  say  b  their  report  for  1881,  that 


k 


i  Menage.  iSSl. 


EXFERIENCB   OF  NEW   YORK. 


177 


"banking  capital'  is  assessed  fully  eighty-five  per  cent,  of  its 
nominal  value,  while  it  is  quite  evident  that  other  personal 
property  is  assessed  at  an  average  of  less  than  ten  per  ccnl," 
And  in  another  place  they  use  these  words :  "  As  it  is  an 
acknowledged  fact  ihat  the  assessable  personal  property  ii 
the  state  equals,  if  it  does  not  exceed,  the  real  value  of  the 
real  estate,  demanding  a  large  share  of  the  attention  of  the 
legislature  and  courts  for  its  protection,  and  yielding  quite  a 
much  profit  to  the  owner  as  real  estate,  it  should  be  made  to 
bear  more  of  the  burdens  of  taxation. 


"who  pays  taxes  on  personal? 

"TTie  answer  to  this  question  is  to  be  found  in  the  as! 
roent  rolb  of  the  cities  and  towns,  and  is  disgraceful  to  the 
commonwealth.  Women,  heirs,  executors,  administrators, 
guardians,  and  trustees  of  persons  of  unsound  mind  are 
assessed  beyond  all  measure  of  justice. 

"  A  man  dies,  leaving  in  personal  property  an  amount,  the 
interest  of  which  is  barely  sufficient  with  rigid  economy  to 
support  the  widow.  The  records  of  the  surrogate  or  the 
publication  of  loss  by  a  life  insurance  company,  reveals  the 
fact,  and  the  assessor,  bound  by  his  oath  to  be  '  diligent ' 
his  inquiry  for  persona!  property,  enters  the  full  amount  on 
hia  roll ;  and  if  in  a  city,  the  tax  of  from  two  to  four  per 
cent,  must  be  paid  from  the  amount  already  too  small  to  pro- 
vide the  necessities  of  life. 

"This  same  assessor,  however,  if  not  forgetting  his  oath 
when  inquiring  of  the  wealthy  neighbor  as  to  his  personal, 
very  likely  accepts  the  negative  answer  as  truthful,  though 

•  They  must  refer  only  to  incorporated  banti.  One  of  ihc  wont 
fealuies  of  taxatiua  >□  New  Voik  i£  tlic  evuioa  of  iBxalion  by  private 


178 


TAXATION  AS  IT  IS. 


it  is  well  kBOwn  to  the  community  that  he  possesses  large 
means. 

"The  one  has  not  yet  learned  how  to  cover  the  personal 
property  by  an  assumed  indebtedness,  while  the  other  is  well 
versed  in  the  many  devices  by  which  he  may  escape  even 
the  '  diligent '  assessor. 

"This  is  no  fancy  picture.  Many  cases  of  hardship  in 
assessing  personal  property  have  come  to  our  notice.  Here 
is  one  :  A  man  in  comfortable  circumstances,  with  a  business 
giving  him  a  good  support,  becomes  insane.  His  business  is 
placed  in  the  charge  of  a  trustee,  who  converts  his  effects 
into  money.  Awaiting  a  better  opportunity  for  investment, 
the  amount  is  deposited  in  a  savings  bank  at  four  per  cent, 
interest,  tbe  only  means  of  support  for  the  wife  and  family. 

"The  assessors  placed  the  full  amount  thus  deposited  on 
the  assessment  roll,  and  yet  they  could  truthfially  say  that 
they  had  not  violated  the  law  in  so  doing. 

"  The  common  practice  of  many  is  to  create  an  indebted- 
ness to  bridge  over  the  ist  of  July,  after  which  the  assessor 
cannot  reach  the  party  for  personal  assessment. 

"  It  must,  however,  be  patent  to  every  one  that  has  given 
any  attention  to  this  matter  of  the  assessment  of  personal 
property,  that  the  present  practice  is  a  farce,  and  should  no 
longer  be  tolerated." 

Governor  Hill  refers  as  follows  to  the  subject  of  taxation, 
in  his  annual  message  for  1886  :  — 

"  It  is  believed  that  the  tax  laws  of  the  state  need  a 
thorough  revision.  The  present  system  of  taxation  has  ex- 
isted for  years  with  few  changes,  and  comparatively  little 
improvement.  Every  radical  modification  seems  to  have 
been  stoutly  resisted  irrespective  of  its  merits  and  propriety. 

"  It  is  evident  that  the  personal  property  of  the  state  doei 
not  pay  its  just  proportion  of  taxes,  and  the  disparity  in  the 


EXPERIENCE   OF  NEW   YORK. 


179 


assessed  valuation  of  personal  and  real  property  verifies  the 
statement  that  the  statutes  governing  the  appraisement  and 
assessment  of  personal  property-  are  to  a  great  extent  defect- 
ive and  do  not  reach  the  great  bulk  of  personalty  for  the 
purposes  of  laxation. 

"  For  years  the  state  assessors  have  directed  public 
attention  to  the  fact  that  the  personalty  of  the  tax-payers 
was  escaping  assessment,  yet  there  has  been  a  shrinkage 
from  1S71  to  1884  (not  inclusive)  of  fio7, 184,371. 

"  The  loss  has  been  upon  the  assessment  rolls  alone,  for 
the  personal  property  of  tlie  citizens  of  the  slate  has 
greatly  augmented  during  the  same  period.  The  wealth 
of  the  state  has  increased  with  its  population  and  re- 
sources, and  if  the  personal  property  does  not  show  an 
increase  ,  upon  the  assessment  rolls,  it  may  be  accounted 
for  in  part  by  a  !ax  administration  of  existing  laws,  but  it 
mainly  may  be  altributed  to  the  defects  in  the  laws  them- 

"That  such  laws  are  inoperative  to  reach  personal  estate 
is  evident  by  the  mere  statement  of  the  fact  that  while  — 
according  to  the  last  report  of  the  state  assessors  —  the 
assessed  valuation  of  ihe  real  estate  of  the  state  is  ti,f>bq,~ 
173,011,  ihe  valuation  of  the  personal  estate  is  only 
^345,418, 361,  or  about  one-eighth  of  the  realty. 

"  It  is  reasonable  to  beUeve  that  if  our  present  tax  bws 
were  reformed  and  placed  upon  some  true  and  consistent 
theory,  the  assessment  of  the  personalty  would  nearly  equal 
the  assessment  of  the  really,  and  thereby  the  present  unjust 
burdens  upon  real  estate  would  be  greatly  alleviated." 

The  state  assessors  in  their  report  for  1886  substantiate 
the  foregoing  with  these  remarks  :  — 

"The  condition  of  the  present  assessment  of  the  real  and 
personal  property  of  the  state  is  correctly  indicated  by  the 


ISO  TAXATION  AS  IT  IS. 

comparison  we  have  instituted  with  former  yean.  The 
comparison  points  to  the  remarkable  fact  that  there  has 
been  an  average  yearly  increase  in  the  aggregate  valuation 
of  the  realty  for  the  purpose  of  taxation,  and,  with  an 
occasional  exception,  a  yearly  decrease  in  the  aggregate  of 
the  personal. 

"The  siseased  valuation  of  real  cslnCe  in  1875  wms    .    ft ,960,35 2,703 
The  HSiessed  valualioa  in  1SS5  was 2,762,348,218 

Increase  in  [en  years (Soli995i5i5 

The  assessed  valuation  of  personal  property  in  1S75 

w»»       1407.4371339 

Assessed  valuaiioo  in  1885  was 33*,383.239 

Decrease   in  ten  years {75.044,160 

The  assessed  valuation  of  real  estate  in  1884  was    .    {2,669,173/111 
Assessed  value  in  itiSs  wai 2,763,348,218 

Increase  in  1885 {92,175,207 

The  aucsled  valnatinn  of  personal  property  in  1884 

w»* (345.418.36' 

Assessed  value  in  1SS5  was 33%3^3>239 

Decrease  in  1SS5 {13,035,112 

Aggregate  increase  of  real  and  personal  in  18S5     ■         {79,140,085 

"  A^fgate  Tax  paid  by  the  Real  and  Personal,  rtspectivfly, 

in   iS^S  '""»'  iSSs,  and  the  Rate  Per  Cent,  paid  by  the 

Real  and  Personal  in  Said  Years. 

"The  amount  of  state  tax  levied  for  all  purposes  in  1875 
was  {14,206,680.11. 

"The  rate  of  state  tax  for  the  above  year  was  six  mills  on 
each  dollar  of  valuation. 

"The  aggregate  sum  of  said  tax  paid  by  the  realty  in  said 
year  was  $11,762,116. 


EXPERIENCE   OF  NEW   YORK. 

"  Paid  by  the  personal,  ^2, 444, 564. 61. 

"The  amount  of  state  tax  levied  for  all  purposes  in  li 
was*7,763,57i.78. 

"  The  rate  of  stale  tax  on  each  dollar  of  valuation  1 
ajj  milts. 

"  The  aggregate  sum  of  said  tax  paid  by  the  realty  in  said 
year  was  56,873,120.50, 

"  Paid  by  the  personal,  5889,452. iS. 

•  "  Rate  per  cent,  paid  by  real  estate  in  1875  was  &2-^. 

•  "  Rate  per  cent,  paid  in  1885  was  SSj^^j- 

•  "  Rale  per  cent,  paid  by  the  pereonal  in  1875  was  I7tW' 
■    "  Rate  per  cent,  paid  in  18S4  was  iItVo- 

"If  the  above  statement  had  included  the  year  1871,  when 
the  assessed  valuation  of  the  personal  aggregated  545^1- 
607,731  (the  largest  amount  that  has  been  spread  upon  our 
assessment  rolls),  it  would  appear  that  the  personal  paid 
over  twenty  per  cent,  of  the  total  state  tax  in  said  year. 
Now  it  is  generally  conceded  that  the  personal  property 
has  proportionately  increased  with  the  real,  and  that  it  is 
not  sustaining  its  just  proportion  of  taxation.  We  therefore 
suggest  remedial  legislation. 

"  Estimated  AggTtgatrs  of  Ike  Personal Prpperfy  owned  in  Ike 

State  Liable  to  Assessment  andTaxation. 
djHlal  turptua  and  undivided  profits  of  the  National 

banki Jl  16,458,01 

(Zapilal  lurplus  and  UDdivided  profils  of  state  bunds  .  34,443.289 
Capital  invested  in  manufacturing,  iSSo.  113  prF  census,  514,246,575 
Value  of  live  stuck  and  farming  implements  (census  c 

tS8o) 160,461.024 

Capital  in  mercantile  interest';,  eslitnated 

Capital  invested  in  l>onds  anil  oinrlgages.  estimated  .     . 
Capital  invested  in  jewelcy,  paintings,  statuary,  bouK- 

bold  furniture,  etc.,  not  exempt 

t2,cS5.6to,S88 


182  TAXATIOIf  AS  If  IS. 

"  It  is  a  reasonable  assumption  that  the  above  amount 
represents 'a  fractional  part  of  the  personal  of  our  tax- 
payers, and  that  the  total  sum  lialile  to  assessment  and 
taxation  fully  equals  the  aggreyale  ;issessment  of  the  real 
estate  of  1884.  At  all  events,  the  above  estimates  substan- 
tially indicate  that  the  personal  sustains  but  a  small  per- 
centage of  the  burdens  of  government,  and  that  the  laws 
relating  to  the  assessment  thereof  are  loosely  executed  or 
defective, 

"  Statement  of  the  Assessed  Vaiuation  of  Personal  Property 
in  Other  States. 

"In  1880  the  assessed  valuation  of  personal  properly  in 
the  state  of  Massachusetts  was  S473.S96173O1  aggregating 
^151, 128,018  more  than  the  valuation  of  the  personal  in  the 
slate  of  New  York  in  thai  year. 

"  In  the  above-named  year,  the  assessment  of  said  prop- 
erty in  the  state  of  Ohio  was  ^440,682,803,  aggregating 
$118,214,091  more  than  tlie  assessment  of  the  personal  in 
New  York  in  said  year. 

"In  Ohio,  the  personal  paid  about  4a  per  cent,  of  the 
slate  tax.  In  Massachusetts,  it  paid  about  4ZiVa  P^''  '^'^^^ 
In  Indiana,  with  a  personal  valuation  of  ?i89,i3i,892,  it 
paid  about  35  per  cent.  In  Illinois,  with  a  personal  valua- 
tion of  ?2 II, 1 75,34 1,  it  paid  about  37  per  cent.,  while  the 
Empire  State,  embracing  the  city  of  New  York,  wherein 
is  concentrated  and  owned  a  lat^e  share  of  t!ie  wealth  of 
the  nation,  the  personal  paid  in  the  aforesaid  year  of  1880, 
about  14  per  cent,  of  the  state  tax,  and  in  the  year  1884, 
only  1  r^^  of  said  tax. 

"  Bearing  on  the  question  of  personal  taxation,  the  New 
York  Times  of  July  7,  1885,  says:  'There  is  scarcely  a 
doubt  that  the  wealth  held  In  this  city  in  the  forms  classed 


EXPERIENCE   OF  NEW   YORK. 


183 


as  personal  property  greatly  exceeds  that  held  in  real  es- 
tate . .  .  There  is  no  doubt  that  twenty-five  men  in  this 
city  could  be  named,  whose  wealth  in  personal  property 
alone  exceeds  the  entire  valuation  of  thai  class  of  property 
as  shown  on  the  assessment  rolls.' 

"  Now,  if  the  alwve  statement  is  correct,  viz.,  that  the 
personal  property  held  in  New  York  City  greatly  exceeds 
*  that  held  in  real  estate,  the  following  statement  of  the  as- 
sessed valuation  of  the  real  and  personal  in  that  city,  in 
1S84,  suggests  that  a  mere  trifle  of  the  personal  property  of 
its  citizens  is  spread  upon  its  assessment  rolls,  for  the  pur- 
pose of  state  or  local  taxation.  Assessed  valuation  of  the 
real  estate  in  New  York  City  in  1884,  was  2i,i  19,761,597. 
Assessed  valuation  of  personal  property  in  1884,  was  2i8i,- 
504,533.  The  New  York  Tribune  of  July  iS,  1885,  says: 
' ,  .  .  The  wealth  of  New  York  City  is  exceeded  by  the 
valuations  of  only  four  states  in  the  Union  — New  York, 
Massachusetts,  Ohio,  and  Pennsylvania.' 


"  Statement  showing  the  Amount  of  Slate   Taxes  paid  by 

the  Real  and  Personal  0/  the  Several  Counties  in  1884, 

that  embrace  the  Principai  Cities  of  the  State. 

"The  county  and  city  of  New  York  paid  state  tax  i 
aforesaid,  as  follows :  — 

On  in  a~st:sseil  valuation  uf  ie>l,  {3,07 3, 104.54. 

On  its  nascsseJ  v.ilualiuD  of  pcraoanl,  JsoS.fiSl.M. 

The  real  eslate  paid  of  said  lax,  83^^  per  cent. 

The  personal  paid,  xft^^n  per  cent. 

"The  county  of  Kings,  including  the  city  of  Brooklyn, 
paid  state  tax  as  follows  :  — 

On  real  citate,  (731.031^5. 

On  personal  prupeity,  134,392.69. 


18+  TAXATION  AS  IT  IS. 

The  pmonal  paid  of  said  lax,  4.]^  per  cent. 
The  real  paid,  95^  per  cenl. 

"  The  county  of  Monroe,  including  the  city  of  Rochester, 

paid  said  tax  as  follows  :  — 
The  renl  csl»le  paid,  !l65,i3l.95. 
The  penonal  paid,  S8,79i.35. 
The  real  paid  of  said  tax,  •I4y^  per  cenL 
The  personal  paid,  5^^^  per  cent. 

"  The  county  of  Albany,  including  the  city  of  Albany,  paid 
state  tax  as  follows  :  — 

On  iU  assessed  realty,  f  183,529.64. 

On  ils  assessed  personal,  (19,46345. 
The  real  paid  of  said  (ax,  %<j-}^  per  cent 
The  personaE  paid,  10,^9  per  cenL 

"  Erie  County,  including  the  city  of  Buffalo,  paid  state  tax 
as  follows :  — 

On  asftoaett  really,  $228,750.43. 
On  assessed  personal,  S27.521.7S. 
The  teal  paiii  of  said  tax,  87^  per  cenL 
The  personal  paid,  "rifo  pet  cenl." 

It  is  not  then  surprising  that  the  Hon.  Alfred  C.  Chapin, 
late  Comptroller  of  New  York  Slate  and  present  Mayor  of 
Brooklyn,  advocates  a  new  system  of  taxation,  and  speaks  of 
the  present  system  as  "  the  antiquated  system  now  prevail- 
ing." 

BOARDS  OF  EyUAUZATlON   IN   NEW    VORK    STATE. 


One  of  the  strange  products  of  our  astonishing  financial 
methods  is  the  board  of  equalization,  which  has  reached  its 
highest  development  in  New  York,  and  illustrates  the  para- 
doxical remark  already  made,  that  the  more  you  improve 
our  present  system  of  taxation,  the  worse  it  becomes. 


EXPERIENCE   OF  NEW    YORK. 


135 


L 


The  tendency  to  undervaluation  is  an  inherent  part  of 
present  methods.  Preceding  chapters  have  made  this  suf- 
ficiently obvious,  Real  estate  must  be  assessed  by  men  of 
local  knowledge,  but  men  of  local  knowledge  are  interested 
in  their  own  locality  and  are  elected  to  represent  its  interests. 
The  largest  assessment  district  which  is  practicable  is  the 
county,  and  it  is  possible  to  assess  property  unifonnly  within 
a  county.  In  New  York  state,  however,  assessment  is  made 
by  township  assessors,  and  the  lower  the  assessment,  the 
lower  the  tax.  Each  township  board  tries  to  outdo  the 
others  in  under- assessing  property,  although  sworn  to  return 
it  all  at  its  true  selling  value.  To  correct  tiiis,  the  county 
board  of  supervisors,  consisting  of  one  supervisor  from  each 
town,  constitutes  a  county  board  of  equalization  with  power 
to  raise  or  lower  the  assessed  valuation  of  real  estate  only,  in 
any  township,  provided  it  docs  not  alter  the  grand  total. 

What  is  taken  from  one  town  must,  then,  be  added  to 
another.  This  is  an  arbitrary  proceeding  and  can  at  best  be 
baaed  on  guess-work.  It  is  said,  however,  that  this  power  is 
used  for  political  purposes;  that  a  board  of  supervisors  of 
one  party  has  been  known  to  punish  a  town  for  giving  a 
majority  for  the  opposite  party,  by  adding  a  round  sum  10 
the  assessed  valuation  of  its  real  estate,  which  would  natu- 
rally be  taken  from  towns  in  favor  with  the  dominant  party. 
After  the  county  board  of  equalization  has  arranged  the  reta 
live  valuations  of  the  different  townships  satisfactorily,  a  state 
board  of  equalization  equalizes  the  county  valuations  of  real 
estate  in  a  similar  manner,  taking  something  off  from  the 
valuations  of  some  of  the  counties  and  adding  it  to  the  valu- 
ations of  other  counties,  but  leaving  the  aggregate  valuation 
throughout  the  sUte  unchanged.  The  opportunities  for  a 
misuse  of  power  are  equally  great,  and  the  proceedings  must 
be  of  quite  as  arbitrary  a  character.     Complaints  are  perpet- 


J 


L 


IM  TAXATWM  AS  IT  tS. 

Italy  hcani  od  acoownt  of  the  cqmltMtioiw  of  the  state  board*  \ 
and  a  good  deal  of  mcigoiiisin  bcrwcn  nuioas  pant  of  die  \ 
mate.  tsptoaBf  between  New  York  City  and  tbe  test  of  Ifae  | 
state,  n  ptodoced.     It  h  said  that  the  pcJhical  ii 
the  Emnen  indBces  ibc  bowd  of  eqtuluatkn  to  taise  the  1 
rakiatioo  of  New  Voik  City  uodoly ;  bot,  oa  the  other  hand.    I 
the  farmen  know  that  a  Urge  proportioD  of  the  vast  wealth  i 
of  New  Yofk  City  exapa  tualioo,  and  Ibey  feel  that  the  I 
city  does  not  bear  ao  adequate  proponion  of  the  public  bur- 
dens.    The  ilate  taxes  arc  apportioDed  aroong  the  counties, 
and  the  cotmly  taxes,  including  the  apportioned  amount  of 
State  taxes,  are  apportioned  among  the  towns.    The  town 
authorities  add  state  and  county  taxes  to  the  appropriations 
for  town  expenses,  and  raise  the  whole  on  the  basb  of  an  ] 
assessment  of  the  town  assessors.      The  indrnduaJ  i 
otents  are  not  changed  by  the  county  and  state  boards,  but  I 
the  tax  rate  for  county  and  state  purposes  must  depeiMl  oa  J 
the  ^poriioninent.     Town  authorities  send  the  amount  due  J 
to  the  county  authorities,  and  the  county  authorities  forward  'M 
to  state  authorities  the  amounts  as^gned  to  their  respectrve  j^ 
counties. 

The  state  board  of  equaUzation,  organized  in  1 859.  o 
of  the  lieutenant-governor,  the  secretarj-  of  state,  the  attor- 
ney-gei»eral,  the  stale  treasurer,  the  state  engineer  ar>d  sur- 
veyor, the  speaker  or  the  .\ssembl)'.  and  three  traveling  state 
Bscssots.     The  traveling  assessors  must  visit  every  county 
in  the  state  at  least  once  in  two  years  and  "  prepare  a  written  j 
digest  of  such  facts  as  the>-  may  deem  most  important  far  J 
aiding  the    board  of  equalization  in  the   discharge  of  i 
duties."      The  state  assessors  do  all  the  wort,  and  really  I 
constitute  the  board  of  equaliiation.     The  other  members  I 
ve  a  useless  appendage,  and  the  assessors  have  recommended  1 


EXPERIENCE  OF  NE  W  YORK, 


187 


that  the  board  of  equalization  be  reconstructed  by  the  addi- 
tion of  two  assessors  and  by  the  removal  of  the  other  state 
officers  from  the  board.^ 


1  See  various  annual  reports  of  state  assessors,  especially  that  for 
1886.  See  also  "Tax  Laws  of  New  York/'  by  W.  W.  Saxton,  New 
York,  1880,  Chi^ter  L 


k 


CHAPTER  VIII. 

EXPERIENCE   OF  OTHER   STATES. 

I.    NEW   HAMPSHIRE. 

HON.  GEO.  T.  SAWYER,  as  chairman  of  a  special  tax 
commission,  made  a  report  to  the  legislature  of  New 
Hampshire  in  1876,  in  which  he  estimates  that  from  one-half 
to  one-third  of  the  personal  property  in  that  state  subject  by 
law  to  taxation  escapes,  and  he  recommends  radical  changes 
in  the  tax  laws. 

II.    CONNECTICUT. 

The  following  remarks  are  quoted  from  the  "  Report  of  the 
Special  Tax  Commission,"  made  in  1887  ;  "  A  comparison  of 
the  grand  lists  of  the  state  from  1864  to  18S5,  as  given  in  the 
table  appended  to  this  report,  will  show  that  the  proportion 
of  those  intangible  securities  to  other  taxable  property  has 
steadily  declined  from  year  to  year.  In  1855  it  was  nearly 
ten  per  cent,  of  the  whole ;  in  1865  about  seven  and  one- 
half  per  cent. ;  in  1875  a  hrtle  over  five  per  cent. ;  and  in 
1885  about  three  and  three-fourths  per  cent.  Yet,  during 
the  generation  covered  by  these  statistics,  the  amount  of 
state,  railroad,  and  mimicipal  bonds,  and  of  Western  mort- 
gage loans,  has  very  greatly  increased,  and  our  citizens  have 
invested  large  sums  in  them  in  almost  or  quite  every  town 
in  the  state.  Why,  then,  do  so  few  put  them  into  the  tax 
list?    The  terms  of  the  law  are  plain,  and  the  penalties  for 


EXPERIENCE  OF  OTHER  STATES.  189 

its  infringement  are  probably  as  stringent  as  the  people  will 
bear.  Many  attempts  have  been  made  from  early  tiroes  to 
create  more  effectual  ones,  but  with  little  success.  .  .  .  The 
truth  is,  that  no  system  of  tax  laws  can  ever  reach  directly 
the  great  mass  of  intangible  property.  It  is  not  to  be  seen, 
and  its  possession,  if  not  voluntarily  disclosed,  can,  in  most 
cases,  be  only  the  subject  of  conjecture.  .  .  .  Such  consid- 
erations as  these,  coupled  with  the  results  of  an  investigation 
of  now  nearly  three  years  into  the  practical  working  of  our 
tax  system,  have  brought  us  to  the  conclusion  that  all  the 
items  of  intangible  property  ought  to  be  struck  out  of  the 
list.  As  the  law  stamls  it  may  be  a  burden  upon  the  con- 
science of  many,  but  it  Is  a  bidden  on  the  property  of  the 
few ;  not  because  there  are  few  who  ought  to  pay,  but  be- 
cause there  are  few  who  can  be  made  to  pay.  Bonds  and 
notes  belonging  to  estates  of  deceased  per^ions  or  infants 
are  generally  traced  through  the  Probate  Records,  and 
brought  into  the  tax  list ;  but  those  held  by  an  individual 
are,  for  the  most  part,  concealed  from  the  knowledge  of  the 
assessors ;  nor  do  they,  in  most  towns,  make  much  effort  to 
ascertain  their  existence.  The  result  is  lliat  a  few  towns,  a 
few  estates,  and  a  few  persons  of  a  high  sense  of  honesty, 
bear  the  entire  weight  of  the  tax.  Such  has  been  the  uni- 
vetsal  result  of  similar  laws  elsewhere." ' 


MARYl-AND. 


The  defective  assessment  of  personal  property  in  Mary- 
land is  a  matter  familiar  to  all  citizens  of  that  state,  and  it 
needs  no  lengthy  treatment  here. 

The  Appeal  Tax  Court  of  Baltimore  estimated  in  r88i. 


>  "  Report  of  the  Special  Cununitlce  of  C'unneclicul  on  the  Subject  □( 
TaxUion,"  Jannaiy  seuion,  1S87,    fagn  33,  36,  37. 


190  TAXATION  AS  IT  IS. 

that  Rfty  millions  of  dollars  were  in  this  city  invested  in  I 
United  States  bonds  or  other  government  securities,  m 
lion  to  those  used  in  banking.  Now,  these  bonds  c 
openly  manipulated  in  such  manner  as  to  render  a  Urge 
share  of  tlie  persona!  property  of  Baltimore  untaxable. 
They  can  pass  from  hand  to  hand,  and  debts  can  be  created 
on  them.  It  is  customary  for  corporations  and  weallli;' 
individuals  to  invest  in  bonds  temporarily,  to  avoid  taxation. 

One  of  the  questions  propounded  to  the  Appeal  Tiw 
Court  of  Baltimore,  by  the  tax  commission  of  tSSt.wai 
this  1  "  To  what  extent  do  you  succeed  in  reaching  invest- 
ments made  by  residents  of  this  state,  in  private  securities 
of  any  kind?"  The  answer  was:  "We  utterly  fail  in 
reaching  private  securities  of  every  description.  Here  and 
there  only  have  they  been  returned  by  some  conscientious 
holder."  The  city  collector  was  asked  this  question  by  the 
same  commission  :  "  Does  your  experience  enable  you  to 
suggest  any  effective  way  of  collecting  taxes  on  personal 
property?  "  He  replied  ;  "The  collection  of  taxes  on  per- 
sonal property  is  attended  with  so  many  and  such  insot^J 
mountable  difficulties  that  I  am  at  a  loss  what  suggestion  (fl 
make  looking  to  a  more  efleclive  collection."  ^k 

It  may  be  further  remarked  that  the  same  tendency  to 
reduce  the  relative  assessment  as  the  wealth  of  the  tax-payer 
increases,  is  found  in  Maryland  as  well  as  in  other  states.  It 
is  seen  even  in  the  case  of  real  estate,  although  the  evil  is,  I 
think,  not  so  marked  with  us  as  it  is  elsewhere.  Neverthe- 
less, a  house  worth  two,  three,  four,  or  live  thousand  will,  ia 
Baltimore,  at  any  rate,  be  assessed  for  nearly  its  true  selli 
value,  and  sometimes  for  more,  while  a  house  worth  fro 
thirty  to  eighty  thousand  or  more  will  probably  not  be  ■ 
sessed  for  over  two-thirds  of  its  value,  the  owner  atguing,  a 
with  some  plausibility,  that  it  could  not  be  sold  for  what  | 


EXPERIENCE    OF  OTHER   STATES. 


191 


cost.  It  may  be  doubted,  however,  whether  the  legislature 
intended  those  whose  means  enables  ihera  to  build  houses  so 
expensive  that  there  is  no  market  for  them,  to  bear  a  smaller 
relative  burden  than  others. 

It  b  interesting  to  notice  that  the  necessities  of  the  case 
have  led  to  a.  practice  in  Baltimore,  with  reference  to  the 
taxation  of  personal  property,  somewhat  similar  to  that  of 
Savannah.  There  are  not  two  different  rates  for  real  and 
personal  property,  but  personal  property  is  assessed  in  pro- 
portion to  the  income  it  produces.  Personal  property  is  so 
assessed  that  it  yields  ten  per  cent,  on  the  assessed  valua- 
tion, A  thousand  dollar  bond  bearing  three  per  cent,  inter- 
est, for  example,  would  be  assessed  for  only  S300,  It  is 
found  that  a  higher  tax  will  drive  personal  property  from 
Baltimore.  Even  this  arrangement  makes  taxation  high. 
The  state  and  city  tax  rate  for  Baltimore  tn  1888  is  S^.oyJ. 
Every  ten  dollars  in  income  from  personal  property  must 
pay,  then,  ti.o']^,  or  nearly  twenty-one  per  cent.  This  is 
not  a  legal  arrangement  like  the  Savannah  system.  It  is,  in 
fact,  illegal,  but  it  is  the  best  thing  which  can  be  done  under 
our  antiquated  tax  laws.  There  is  a  similar  arrangement 
authorized  by  law  for  the  assessment  for  slate  taxation  of 
the  public  debt  of  Maryland  liable  to  taxation,  whether 
owned  by  residents  or  non-residents.  Debt  bearing  6  per 
cent  interest  is  assessed  at  par ;  debt  bearing  5  per  cent. 
interest  at  S85  in  the  himdred ;  debt  bearing  4^  per  cent. 
interest  at  JSo  in  the  hundred ;  debt  bearing  3  per  cent,  in- 
terest at  8(64  in  the  hundred.  The  state  treasurer  simply 
retains  the  tax,  and  thus  the  difficulty  encountered  in  Ohio 
is  obviated.  Mortgages  in  Maryland  are  exempted  from 
taxation  by  law.' 

'  FuU  of  MarjUDil  retain  fealures  of  the  fiDancisl  ncthodi  of  Ihe 
lut  century.    The  antiquated  artangEmeal  of  fuming  out  the  ctlUcHen 


TAXATION  AS  IT  IS. 


TV,    ILLINOIS. 

Dr,  PattetCs  Etsay. 
Dr.  Simon  N.  Patten  wrote  a  work  called  "  Das  1 

wesen  der  Staaten  und  Sladte  der  Nordamerikanischen 
Union"  (Finances  of  the  States  and  Cities  of  the  United 
States),  published  in  Jena,  Germany,  187S,  which  deals  chiefly 
with  taxation  in  Illinois,  and  which  reveals  a  state  of  things 
in  that  commonwealth  precisely  like  that  described  in  other 
states.  The  assessed  valuation  of  property  in  Illinois  in  1875 
was  as  follows  :  — 

MtLUOKs  or  Dau^ai.   J 

Cattle So 

Railroad! 60 

Real  estate 780 

Ali  other  property 165 

Total 1085 

Real  estate  and  railroads  paid  seventy-eight  per  cent,  of 
the  taxes,  cattle  seven  per  cent.,  leaving  only  fifteen  per  cent. 

of  Ihe  revenues  still  exists  in  Maryland.  As  alicady  mentioned,  the 
coUcclion  of  taxes  in  Harford  County  is  sold  at  auction  tirihe  toweit 
tiidder.  In  Kent  County  landed  property  is  divided  into  three  clanes, 
and  horses  and  cattle  are  unifomily  assessed.  The  details  in  regard  In 
Ihc  aiseisment  of  properly  in  Kent  County  arc  given  in  the  following 
letter  which  I  received  from  Hon.  James  Alfred  Pearce  ;  — 

"  It  appears  from  Ihe  assessment  books  that  ptactically  all  farmitig 
lands  were  divided  into  three  griules  —  at  ^35,  f  25,  and  $15  per  acre. 
There  is  no  tract  so  far  aa  1  have  been  able  to  find,  assessed  a! 
f55,  and  there  are  very  few  tracts  of  fanning  land  assesaeil  at  lesi 

«'s- 

"  Some  small  parcels  of  from  one  to  ten  acres,  and  improved  with 
good  dwelling!,  ate  assessed  higher,  hut  these  are  not  classed  as  farm- 
ing lands. 


EXPERIENCE   OF  OTHER   STATES.  193 

for  all  other  property,  which  is,  of  course,  absurd.  Dr.  Pat- 
ten calls  attention  lo  the  fact  that  assessors  and  collectors  of 
taxes  are  elected  for  one  year  only,  and  as  a  system  of  rota- 
tion seems  to  meet  with  favor  on  the  part  of  voters,  they  are 
devoid  of  that  experience  which  is  an  indispensable  condi- 
tion of  a  faithful  performance  of  duty.  The  (act  that  one 
has  enjoyed  office  for  a  year  is  regarded  as  a  good  reason 
why  some  one  else  should  have  a  chance.  Voters  goud- 
naturedly  consider  a  special  misfortune  which  has  befallen 
one  of  their  number,  or  any  special  need,  as  a  reason  why 
he  should  be  elected,  and  from  motives  of  pity,  weak  and 
inefficient  men  are  elected.  This  appears,  as  far  as  my  ob- 
servation has  extended,  to  be  common  everywhere  in  the 
United  Sutes. 

appealed  to  the  Board  of  Control  and  Review,  and  these  reduced  valua- 
lions  in  mme  cases  lo  I30,  in  some  lo  f  iS,  $20,  and  f  iS,  and  also  ri 
duced  marsh,  hillside,  and  other  uastc  portions  of  large  tra.c1s  lo  Sii 
per  acre  or  f  5  per  acre,  so  that  there  is  an  apjiDretit  u-ant  of  uniform 
ily.  and  lack  of  classiricalion.  Slill,  1  ihink  il  is  safe  to  say  ihal  after 
examination  I  find  three-fourths  of  the  farming  land  in  the  cou 
embraced  in  the  three  grades  of  (35,  {25,  and  515,  There  is  an  abso- 
Intel)'  uniform  assessmenl  of  farm  cattle  as  follows :  — 

H»rscs  and  mules,  each {50 

Cattle 30 

Hogs J 

"The  exceptions  lo  this  classification  are  so  few  as  lo  be  inslgnili- 
eant.  A  few  stallions  kepi  for  breeding  purposes  and  a  very  few  fine 
driving  horses  arc  assessed  higher,  but  probably  not  twenty  in  the 
connly  are  so  assessed.  There  have  been  a  good  many  changes  made 
ID  the  assessments  since  1S76  hy  the  County  Commissioneis  under  their 
general  authoriiy  to  correct  asseunicnls,  but  in  spite  of  all  these,  1  still 
think  that  ihree-rourlhs  of  the  land  is  within  Ihe  Ihrce  classes  men- 
tioned. Of  the  lands  assessed  nt  ^35,  Mime  would  probably  bring  275- 
some  f65,  some  %e/a,  some  S40." 


TAXA  TfON  AS  IT  IS. 


Dr.  Patien  draws  the  justifiable  conclusion  that  the  failure 
of  the  system  of  taxation  in  Illinois  is  accounted  for  by  the 
nature  of  the  system  itself,  and  that  that  must  be  changed  to 
produce  any  considerable  improvement.  The  practice  of 
confining  one's  self  to  the  one  direct  tax  on  tlie  assessed 
value  of  property  must,  he  thinks,  be  abandoned. 

Dr.  Patten  examines  the  allegation  that  the  cause  of  high 
taxation  is  to  be  found  in  universal  manhood  suffrage,  and 
disproves  it  satisfactorily.  He  finds  it  rather  in  the  control 
of  real  estate  speculatore,  who  have  taxed  the  people  for  the 
improvements  of  their  property.  Taxation  has  increased 
more  rapidly  in  small  cities  than  in  large  cities,  and  in  sev- 
eral counties  in  Illinois  where  the  property  owners  were 
clearly  in  the  majority,  he  found  that  the  tax  rate  was  higher 
than  in  Cook  County,  in  which  Chicago  is  situated.'  The 
following  tables  are  instructive  ;  — 

<  Wben  Mt.  Enoch  Pcalt  olTereil  to  give  over  ll.ooo.ooo  to  Batti- 
more  on  condilian  that  ihe  city  ihoutd  nppropriate  $50,000  a  year  foe  a 
free  library,  I  ihink  there  was  do  serious  (ipposilion  on  the  pari  of  the 
rich,  but  one  of  the  poorer  wards  actually  vuled  against  an  acceptance 
of  this  magnanimous  offer !  Workingmen  in  Buffalo  recently  pro- 
tested against  improveinents  which  are  being  carried  forward  in  the 
interest  of  real  estate  owners.  The  Jfial  Eiliilt  Jleeerd  and  Builders' 
Guide,  ofSim  York,  for  March  31,  1888,  says:  "Towns  like  Eliza- 
beth, N.J.,  hare  been  bankrupted  by  the  owners  of  really,  who  insisted 
upon  improvements  which  were  fifty  years  ahead  of  any  possibility  of 
their  being  needed."  There  is  reason  to  believe  that  large  real  estate 
ownen  in  New  York  Gt^  work  bills  through  the  legislature  of  New 
York  for  local  improvements,  to  be  paiil  fur  by  special  assessments  on 
the  property  improved,  which  bills,  however,  nre  purposely  drawn  with 
legal  flaws  in  them,  and  that  after  the  impnivemenls  are  made,  lh« 
law  is  declared  by  (he  court  of  no  effect,  which  throw*  the  cost  of  the 
iillprovementa  on  the  tax-payers.  It  would  be  possible  to  mention  name*. 
The  reader  will  do  well  to  consult  Mayor  Hewitt's  messages  of  18S8,  in 
which  he  complains  of  the  burdens  by  this  means  thrown  un  the  d^. 


EXPERIENCE   OF   OTHER   STATES. 


■3 

a 

:l 

'f 
1 

1 

J        8 

nil 

■- 

1  1  f  i  i 
1  1  1  1  ■ 

i 

S 

1  1  ?  1  ? 

i 

i 

Is      i      1    i 
1      1      1      1    ^ 

i 

i 
a 

f 

1    i    1    1  ° 

i 

; 

J       J      S       i    1 

s'rSpf.™. 

■3. 

s 

3     . 

s     a 

FHOM^tW 

IK  TAXES, 

^H 

\ 

^Cl^^k 

^^^H 

^^l^^^l^^l 

196                              TAXATION  AS  IT  IS. 

^ 

„.„„. 

™,.„^„ 

TOTAL  TAXABLE 

-=■■  1 

Alexander  . 
Pike  .     .    . 
Pulaski  .    . 
Gsllstin  .    . 
Saline      .     . 
Williamson 
Cook      .    . 
Effingham  . 
HimiUon    . 
Hatdin  .     . 
Johnson ,     . 
Randolph    . 
The  Slate    . 

Doltan. 
166,389 
431.888 
'09.775 
92.403 
77.7^ 
86,449 
9.597.<Mi 
143.713 
68,014 
J6,378 
61.536 
Joi,8o9 
19.007.46. 

Dollan. 

2.408.000 

11,488,000 

898.000 

I,S6g,ooO 

1,615,000 

2.336,000 

229,927,000 

3,942,000 

1,697,000 

683,000 

1,365,000 

5,392,000 

1,085,540.000 

1  1 

4.9      ■ 

1 

It  is  true  that  two  parties,  tax-payers  and  non- tax-payers, 
have  never  been  opposed  to  each  other,  as  it  is  true  that 
men  of  means  control  all  our  legislatures  and  municipal 

He  dues  tinl.  however,  appear  to  have  ever  hcmd  thai  this  was  wilfully 
brought  about.     The  rollowiog  quotation  is  ao  extract  from  a  report  of 
the  Pennsylvania  Commission  on  cities,  made  in  1878:   "The  undue 

has  been  the  result  of  a  desire  for  speculation  on  the  part  of  owners  of 
property  themselves.  .  .  .    Large  tracts  of  land  outside  the  built-up  por- 

wealth,  and  councils  besieged  until  they  bave  been  driven  into  making 
appropriations  to  open  and  improve  streets  and  avenues  largely  in  ad- 
vance of  the  real  necessities  of  the  city."     Professor  Henry  C.  Adams 
says  he  is  fully  prepnred  lo  accept  this  testimony.     See  his  "Public 
Debts,"  page  354.    The  plan  which  I  recommend  in  Part  III.,  whereby 
cjtiei  may  secure  a  portion  of  (he  increasing  value  of  real  estate,  would 

EXPERIENCE   OF  OTHER  STATES. 


m 


councils.  Specuktois,  property- owners  in  Western  cities, 
have  spent  public  money  lavishly  for  the  sake  of  helping  for- 
ward a  "  boom,"  and  then  when  the  crash  has  come,  they 
have  cried  out,  "  We  are  ruined  by  univtrsal  suffrage  ! " 

T/m  Report  of  lite  Revenue  Commission  of  j886. 

This  report  indicates  no  improvement  in  the  financial  sys- 
tem of  Illinois  since  Dr.  Patten's  essay  was  published.  The 
following  extracts  from  this  report  reveal  some  of  the  de- 
fects of  present  methods  of  taxation  in  Illinois  t  — 

"The  gross  inequality  in  the  assessments  of  different 
pieces  of  property  of  the  same  kind,  owned  by  dilTerent 
individuals  in  the  same  community,  and  of  ditferent  kinds 
of  property,  regardless  of  ownership ;  as,  for  instance,  real 
estate  and  personalty  —  a  large  proportion  of  the  personalty 
escaping  all  taxes. 

"  The  arbitrary  and  unjust  operation  upon  individual  as- 
sessments of  the  system  of  equalization  between  counties  by 
the  state  board. 

"The  inadequacy  of  existing  methods  to  discover  and 
estimate  valuable  interests  which  have  grown  out  of  the 
inventions  and  refinements  of  modem  commerce. 

"The  want  of  a  central  and  efficient  supervision  of  the 
administration  of  the  revenue  hws  throughout  the  state. 

"  The  realty  of  one  man  is  assessed  at  one-third,  one-half, 
two-ihirds.  or  even  the  full  measure  of  its  actual  value; 
while  that  of  his  neighbor  is  assessed  at  one-sixth,  one-tenth, 
one- twentieth,  or,  as  was  shown  in  one  instance  of  consider- 
able magnitude,  one  twenty-fifth  of  its  actual  value.  The 
owner  of  the  one  pays,  as  his  annual  tax,  five  or  six  per  cen- 
tum of  the  whole  capital  invested,  while  the  owner  of  the 
other  pays  one-fourth  or  one-fifth  of  one  per  cent.  Such 
distinctions  are  too  invidious  to  be  meekly  borne. 


19S  TAXATION  AS  IT  IS. 

"The  discriminations  in  favor  of  pereonal  properly,  and 
against  realty,  are  glaring  and  unjust,  amounting,  in  some 
species  of  the  former  class,  to  an  almost  total  escape  from 
taxation. 

"For  instance,  for  the  year  1884,  in  Cook  County,  contain- 
ing the  great  and  wealthy  city  of  Chicago,  the  total  valua- 

Crediu  of  bank,  banker,  broker,  etc.,  wu    .     .     .  ^8,615 

CiediU  uf  olhcr  Ihan  bank,  banker,  elc.     .     .     ,      .  209,463 

Bonds   and    Mocks 75>^3'> 

Shares  of  capital  stock  of  coiparatioDS  not  of  this 


"The  second  objection  to  the  operation  of  the  present  law 

is  a  very  grave  one,    and  was  uttered  and    reiterated   by 

nearly  every  one  who  appeared  before  us. 

"  For  the  same  year,  the  valuation  of  credits,  other  than 

those  of  bank,  banker,  etc.,  in  the  following  counties,  stood 

thus,  to  wit ;  — 

Cook      ^209-446 

DeKalb 377."3 

Kane      34S,9>3 

UcHemy 400,881 

WinDcbago 725,218 

O^t        432.866 

Stephenson 339i758 

Heni7 136,987 

LaSaUe 632,681 

Knox 793>Si9 

Pike 344.083 

Morgan       461,730 

McLeaD       591.586 

Coles ' 250,109 


LLaS 
Kno 
Pike 
Mori 
McL 
Cole 
"  In  this  important  element  of  wealth,  always  disproportion- 
ately augmented  in  large  cities,  as  compared  by  population. 


EXPERIENCE   OF  OTHER   STATES. 


199 


small  mra]  counties  surpass  metropolitan  Cook,  and  some  of 
them  three  or  four  fold. 

"  Equalization  would  seem  plainly  necessary.  But  how 
does  it  work  under  the  present  system?  The  state  board 
deals  with  the  aggregate  assessment  of  lands,  lots,  and  per- 
sonal property  —  three  classes  —  and  adds  to,  or  subtracts 
from,  each  class  a  fixed  and  arbitrary  percentage ;  thus 
raising  or  lowering  all  property  in  each  class  in  equal  pro- 
portion. Thus  upon  pieces  of  property  already  assessed  at 
a  large  fraction  of  their  value,  frequently  an  increase  of 
valuation  is  made,  which  carries  them  above  their  market 
value. 

"By  way  of  illustration,  we  cite  one  instance  in  Cook 
County,  as  follows :  — 

"A  block  of  real  estate  worth  2 100,000  was  assessed  at 
190,000.  The  Board  of  Equalization  added  sixty-seven  per 
cenL,  making  the  equahzed  assessment  of  that  property 
?i5o,3oo.  If  a  scrupulous  owner  of  credits  in  Cook  County 
should  return  them  at  their  value,  he  would  be  ruined  by  a 
equalization  that  would  bring  the  county  to  its  full  equalized 
value.  In  this  particular,  with  other  counties,  similar  instan- 
ces, more  or  less  extreme,  occur  every  year." 

It  is  to  be  observed  that  the  Illinois  system  of  equaliza- 
tion is  different  from  that  of  New  York.  In  Illinois  the 
assessments  of  individuab  for  all  purposes  are  increased. 
The  rale  of  taxation  is  not  changed,  but  the  basis  for  the 
individual  is  changed.  This  makes  the  equalization  apply 
to  local  taxes,  which  is  not  the  case  in  New  York  state,  and 
it  can  be  very  oppressive  if  one  has  made  an  honest  reti 
The  equalization  of  Illinois  applies  to  personal  property  as 
well  as  real  property,  whereas  it  apjjlies  only  to  the  latter  ii 
New  York  stale.  A  further  difference  is  that  the  Illinois 
authorities   m  equalization  are    not   obUged   to  keep   the 


200 


TAXATION  AS  IT  IS. 


original  aggregate  valuation  of  all  property.  It  is  provided 
that  in  the  county  equalization  the  result  must  be  kept  aa 
near  the  total  assessed  valuation  as  possible. 

A  further  difference  between  the  New  York  and  Illinois 
systems  is  this  :  The  New  York  stale  authorities  demand  of 
the  counties  fixed  sums,  and  each  county  demands  of  its 
towns  fixed  sums,  and  rates  must  be  laid  to  meet  these 
demands.  Illinois  demands  a  certain  percentage  of  the 
assessed  value  of  all  property,  and  whatever  that  yields,  more 
or  less,  Rows  into  the  state  treasury.  When  Dr.  Patten 
wrote  his  essay, — and  probably  it  is  still  the  case, —  the. 
collections  were  poorly  made,  and  showed  radical  defects  in 
the  entire  system. 

It  is  necessary  in  Illinois  to  raise  the  rate  sufficiently  to 
cover  the  loss  on  account  of  failiu'e  to  collect,  and  cost  of 
collection.  The  estimated  loss  on  account  of  both  items 
—  failure  to  collect,  and  the  expenses  attending  the  raising 
of  the  revenues  — was  as  follows  from  1865-1875  :  — 

1S63-1S71  (incluiivc) I O  pet  cent. 

•872 u  " 

1873 18  " 

•874 17    " 

187s '3   " 


I 


It  is  remarked  by  Dr.  Patten  that  the  increased  loss  after  | 
187a  was  due  to  severer  laws  passed  in  that  year  which  led  I 
to  the  assessment  of  property  from  which  no  taxes  could  be  j 
collected. 

Testimony  of  this  sort  might  be  extended  indefinitely,  and  ] 
from  all  parts  of  the  country.  I  might  quote  the  testimony  of  ] 
a  tax-payer  of  Charleston,  South  Carolina,  one  of  the  largest  I 
tax-payers  in  the  state,  who  told  me  that  only  a  fractional  I 
part  of  personalty  was  reached,  and  that  it  was  impossible  ta  1 


EXPERIENCE   OF   OTHER   STATES.  201 

cany  out  the  law  with  regard  to  that  kind  of  property,  as 
the  tax  would  absorb  so  large  a  proportion  of  the  income. 
This  gentleman  stated  that  he  paid  only  on  part  of  his  per- 
sonalty, but  that  the  tax  department  was  only  too  glad  to  get 
what  he  was  willing  to  pay.  I  might  refer  to  the  published 
lists  of  tax-payers  in  Brooklyn  and  New  York  City,  and  call 
attention  to  the  ridiculous  assessment  of  personalty  standing 
agaiDSt  names  known  far  and  wide  for  large  wealth.  I 
might  call  attention  to  a  single  estate  whose  representatives 
acknowledged  a  taxable  personalty  of  thirty'three  millions, 
but  refused  to  pay  on  more  than  eight  millions,  under 
threats  of  withdrawing  their  property  from  the  reach  of  the 
tax-gatherer  in  the  city.  But  this  is  entirely  needless.  The 
actual  experience  of  our  various  American  states  and  cities 
affords  ample  illustration. 


CHAPTER  IX. 


OTHER   FEATURES    OF    EXISTING    FINANCIAL   SYS- 
TEMS  OF   AMERICAN    STATES   AND   CITIES. 


INTRODUCTORY 

WERE  this  a.  book  intended  primarily  for  specialists,  it   I 
would  require  two  or  three  volumes  to  describe  ade-   | 
quately  the  financial  systems  of  American  states  and  cities. 
It  must,  however,  be  distinctly  understood  that  this  is  pri- 
marily a  practical  work  for  practical  people.     Its  purpose  is 
to  draw  attention  to  the  main  features  of  American  state  and    i 
local  finance,  and  not  to  enter  into  all  the  complicated  details    I 
of  administration  and  all  the  complexities  of  legislation  and 
judicial  decisions.      This  book  aims  to  present  an  outline 
sketch  of  what  exists,  and  to  indicate  the  hues  along  which 
financial  reform  must  move.     Readers  will  be  able  to  fill  in 
the  sketch  here  given  by  personal   inquiry  and  research. 
Teachers  who  may  use  this  book  in  the  class-room  will  dis-    i 
cover  many  points  which  should  be  further  explained  to  their    ■ 
classes,  and  will  find  it  advantageous  to  assign  topics  to  their    | 
students  for  further  elucidation.    Local  tax  authorities  will  be    i 
able  to  give  the  needed  information  about  local  taxation,  and 
state  laws  will  be  found  useful  in  a  study  of  state  taxation, 
while  intelligent  legislators  and  state  officials  will  be  glad  10 
explain  to  classes  the  practical  operations  in  which  they  are 
engaged. 


AMERICAN  FINANCIAL   SYSTEMS. 


ORDINARY   BUSINESS   UCENSES   ANB   OCCDPATIOJJ  TAXES. 

All  cities  and  many  stales  have  licenses  for  a  few  occupa- 
tions, and  these  are  generally  speciRc.  Fixed  sums  are  paid 
for  the  privilege  of  engaging  in  a  few  specified  gainful  pur- 
suits. The  privilege  of  retailing  liquors  is  probably  taxed 
in  every  American  city,  while  slate  and  county  often  add  a 
license  lax  to  ihe  local  license  tax.  In  a  Georgia  ciiy  liquor- 
dealers  pay  four  license  taxes ;  namely,  one  to  the  ci^, 
one  to  the  county,  one  to  the  state,  and  one  to  the  federal 
government.' 

Boston  has  license  taxes  for  pedlers,  keepers  of  billiard 
tables,  pawn- brokers,  carriages,  second-hand  dealers,  horse- 
car  driven,  junk-dealers,  owners  of  dogs.  Owners  of  hacks 
for  hire  are  often  taxed  by  the  license  system.  Keepers  of 
bowling-alleys  and  dealers  in  fireworks  often  pay  a  license 
for  this  privilege.  Keepers  of  intelligence  offices  are  among 
those  who  appear  to  be  frequently  required  to  pay  an  annual 
license  tax.  Pedlers  are  fref,uently  required  to  lake  out  a 
license.  Virginia,  for  example,  passed  a  law  approved  Janu- 
ary 37,  1S88,  taxing  each  pedler  ^300  when  he  travels  on  foot 
and  I500  provided  he  "peddles  otherwise  than  on  foot." 
wys  and  bootblacks  pay  a  license  lax  of  twenty-five 
Eeu:h  in  Cleveland,  Ohio.  The  object  of  this  license 
r  probably  to  bring  about  a  registration  of  newsboys 

r  bootblacks. 

Although  these  charges  for  the  licenses  are  generally  spe- 

in  intoxicating  liciuors  in  Savuinali  pays  as  foUowE:  — 
t.   Federal  government  license,  ^35. 
a.    Stale  licenit,  J50. 

3.  County  licrnse,  Jioo.    (Chalham  County.) 

4.  City  licenie,  S200. 


204 


TAXA  TION  AS  IT  IS. 


cific,  the  amount  collected  from  each  licensed  person  is  not 
always  the  same.  Keepere  of  horses  for  hire  are  sometimes 
charged  so  much  for  each  horse  or  each  carriage.  Street- 
car lines  are  often  charged  so  much  for  each  car.  Keepers 
of  billiard  tables  are  frequently  charged  a  certain  sum  for 
the  f\TA  billiard  table  and  a  less  sum  for  each  additional 
Uble. 

Northern  states  and  cities  require  licenses  for  a  few  speci- 
fied pursuits  only,  and  leave  every  one  perfectly  free  to  enter 
all  other  occupations  according  to  opportunity  and  inclina- 
tion.    The  system  of  freedom  obtains. 

Southern  states  and  cities  pursue  a  different  policy ;  namely, 
thai  of  restriction.  A  special  tax  is  exacted  from  every  one 
who  within  their  limits  attempts  to  gain  a  livelihood,  and  the 
purpose  of  the  liceose  system  is  twofold :  first,  revenue ; 
second,  local  protection  by  exclusion  of  competition.  It 
would  require  too  much  space  to  give  all  the  regulations 
concerning  licenses  in  Southern  states ;  indeed,  this  entire 
book  would  not  be  sufficiently  voluminous  for  that  purpose. 
It  may  be  said,  however,  that  the  license  system  is  universal 
south  of  Mason  and  Dixon's  line.  A  few  examples  will  be 
given  which  a  perusal  of  state  laws  and  municipal  ordinances 
will  show  any  one  to  be  merely  typical. 

In  Charleston,  South  Carolina,  there  are  fifty-six  classes  of 
business  to  which  licenses  are  issued,  besides  a  few  special 
licenses.  One  gas  company  paid  a  license  of  S5D0  ;  seven 
building  and  loan  associations,  a  license  tax  of  $50  each  ;  two 
railroad  companies,  ?soo  each;  two  real  estate  agencies, 
J50  each;  one  telephone  company,  S500;  Iwo  telegraph 
agencies,  S500  each ;  eight  auctioneers  and  real  esLitc  bro- 
kers, ^75  each;  twenty-three  billiard  tables,  $25  each; 
twelve  boarding-houses  and  hotels,  from  $\o  to  Sioo,  ac- 
cording to  the  number  of  rooms ;  barbers,  for  each  chair, 


AMERICAN  FINANCIAL   SYSTEMS.  205 

f  3  ;  one  circus,  {500 ;  builders,  mastei  mechanics,  and  work- 
men of  all  trades  and  employments,  not  specially  named 
elsewhere,  sixty-six  employing  no  hands,  J 1 1  each,  and  thirty 
employing  not  over  ten  hands,  S30  each  j  four  dendsts, 
whose  gross  business  does  not  exceed  Siooo  each,  ^15,  and 
four  whose  gross  business  does  not  exceed  $2000  each,  ^15  ; 
three  dealers  in  sewing-machines  pay  from  ^20  to  ^40  each, 
according  to  sales  ;  commercial  brokers,  Sioo  each  ;  five  ste- 
vedores, S50  each  ;  eight  merchant  tailors,  850  each  ;  dealers 
in  merchandise  not  specially  named  elsewhere  pay  from 
fao  to  J500,  according  to  sales.  The  total  receipts  of 
Charleston  for  the  year  ending  December  31,  1886,  from 
licenses,  amounted  to  5128,459,  out  of  a  total  revenue  of 

A  thoroughly  "  protected  "  town  is  Charlotte,  North  Caro- 
lina, Every  bar-keeper  must  pay  Jiooo  for  the  privilege  of 
selling  spirituous,  vinous,  and  malt  liquors ;  every  express 
company,  ^250;  every  gas  or  electric-lighting  company, 
Jioo;  on  every  fruit  or  vegetable  stand,  Sio  must  be  paid; 
every  bootblack  must  pay  $3  ;  surgeons,  dentists,  physicians, 
lawyers,  civil  engineers,  etc.,  f  15  each. 

The  "  Schedule  of  Licenses  "  in  the  lax  ordinance  of  the 
city  of  Atlanta,  for  the  year  1886,  occupies  six  pages  of  the 
printed  ordinance. 

Persons  who  barter  or  sell  goods  within  the  state  of  Mary- 
land must  first  procure  a  license,  called  a  "  trader's  license," 
for  which  the  following  charges  are  made :  — 
If  the  applicant's  ilock  does  or  will  nut  exceed  ft. 000,  a  license  of  fia. 
Ifover  |i,COOaD(l  teas  than  {1,500,  a  license  of  I15. 


>  See  '•  yrar-Book  of  the  City  of  Charleston 


TAXA  TION  AS  IT  IS. 


If  over  »6,ooo  and 

ess  Chan    8,000,  a 

license  a^Up- 

■■       8.000       " 

"        10,000, 

"      ••        50- 

"       10,000 

"      i5.«». 

■■      ■•        65. 

"         IJ.OOO 

■'      20,000, 

"      "         So. 

"       20,000 

"      30,000, 

■'      "       100. 

"   30.000    " 

"      40.000, 

"     "      "S. 

If     40,000  or  ov 

ef. 

'■      '■      'i°- 

A  female  engaged  in  vend 

ng  milliner)-,  whose  Hock  doe*  n 

me  exceed  f  500,  is  entilled 

0  a  license  fur  (6 

The  receipts  from  this  source  of  revenue  for  the  year  end- 
ing September  30.   1887,  were  $!&■;, iS-j.ig.      Many  other    ' 
persons  pay  licenses  in  Maryland,  as,  for  example,  brokers, 
bankers,  pedlers,  liquor-dealers,  and  express  companies.    'ITie 
total  receipts  from  licenses,  for  the  year  ending  September 
30,  1887,  amounted  to  5521,311.14  out  of  total  receipts  of 
?2,44o,363.53  ;  but  part  of  the  total  receipts  was  expended  in 
the  redemption  of  stale  stock,  and  a  considerable  portion  was 
used  in  purchasing  stock  for  the  sinking  fund.    The  ordinary    ; 
expenses  of  the  state  government  amounted  to  only  31,699,-    ' 
063.44.     It  "''ll  be  seen  that  a  large  proportion  of  state  ex- 
penses is  provided  for  by  the  Maryland  system  of  licenses, 
The  property  tax  of  iSJ  cents  on  the  $100  for  this  period    , 
yielded  ?gio,g4g.50.     Among  the  license  fees  of  Maryland 
which  has  yielded  a  considerable  income  up  to  the  present    ' 
year  was  the  marriage  license  of  $4.50,  of  which  fifly  cents 
was  for  the  clerk  of  the  court.    The  marriage  license  fees  for 
1886  yielded  the  state  ?i4, 226.98  net.     This  fee  was  reduced 
to  one  dollar  in   1886,   because  it  was  considered  unjust, 
oppressive,  and  a  restraint  upon  marriage.    Maryland  taxed 
bachelors  in  the  last  century,  to  encourage  matrimony,  and 
it  was  undoubtedly  a  departure  from  ancient  policy  to  tax 
marriage. 

The  system  of  licenses  on  persons  engaged  in  ordinary 


AMERICAN  FTNANCrAL   SYSTEMS. 


lift 


I 


pursuits  is  a  most  vicious  one  from  every  point  of  view.  It 
tends  lo  promote  pauperism,  because  it  makes  it  difficult  to 
enter  any  pursuit  which  one  may  desire  to  follow.  The 
license  fees  are  considerable,  and  are  a  great  burden  to  per- 
sons beginning  business,  as  every  one  who  has  lived  in  a 
Southern  city  knows. 

When  a  man  has  failed  in  one  pursuit,  the  license  fee  for 
entering  another  is  often  an  insurmountable  obstacle.  Li- 
censes prevent  freedom  of  movement.  It  is  desirable  that 
every  one  should  be  at  liberty  to  move  about  from  place  to 
place,  and  to  change  his  pursuit  from  time  to  time  until  he 
can  find  the  right  place  and  the  right  occupation,  and  then 
be  enabled  to  gain  a  livelihood.  A  considerable  proportion 
of  the  improvements  in  modern  times,  as  compared  with 
previous  centuries,  is  due  to  increased  freedom  of  movement. 
The  license  system  may  be  fairly  called  inediieval  in  its 
character.  The  tendency  of  modem  times  is  supposed  to 
be  in  favor  of  giving  a  man  every  opportunity  lo  make  the 
most  of  his  talents,  and  jiarticularly  to  place  no  obstacle  in 
the  way  of  his  becoming  independent  and  self-supporting. 
The  license  system  pushes  the  comparatively  weaker  ele- 
ments and  the  industrially  unfortunate  down,  and  then  helps 
to  keep  them  down. 

The  license  system  imposes  regressive  taxation  upon  those 
who  live  under  it.  The  rate  of  taxation  increases  as  one's 
means  decrease.  It  violates  the  fundamental  principle  of 
equality  of  taxation. 

The  license  system  drives  men  away  from  the  states  and 
cities  in  which  it  exists.  It  comes  repeatedly  to  the  notice 
of  the  careful  observer  that  one  who  is  more  or  less  doubt- 
ful about  starting  bvisiness  in  a  Southern  city  is  finally  decided 
not  to  do  so  by  the  license  tax.  Those  who  have  left  such 
a  city  would,  in  some  cases,  undoubtedly  have  developed  a 


106 


TAXA  TION  AS  IT  IS. 


business  which  would  have  been  beneficial  to  Ihe  city  and 
state,  had  they  not  been  deterred  by  the  license  taxes.  T^es 
on  property  are  generally  high  in  cities  which  have  licenses. 
Licenses  like  many  of  ours  remind  me  of  taxation  in  the 
time  of  feudalism,  when  only  those  were  taxed  who  were  too 
weak  to  resist.  Tliose  who  are  prosperous  find  specific 
licenses  a  small  burden,  and  those  who  are  just  entering  a 
business  career  are  too  weak  to  resist  successfully.  Licenses 
thus  encourage  monopoly  and  are  undemocratic.  Of  course 
the  case  of  licenses  for  natural  monopolies  and  corporations 
is  essentially  different,  and  in  case  of  liquor  licenses  restric- 
tion is  the  very  thing  aimed  at,  and  is  the  justification  of 
high  license.' 

It  is  strange  that  our  Southern  states,  which  have  prided 
themselves  on  their  liberal  views  in  regard  to  international 
trade,  should  maintain  the  most  oppressive  system  of  local 
protection  known  to  the  civili/ed  world. 

Licenses  on  corporations  of  a  quasi  public  nature,  or  those 
engaged  in  pursuits  which  are  natural  monopolies,  ought  to 
be  in  proportion  to  gross  revenues,  and  not  specific.  South- 
em  cities  usually,  however,  lax  street- car  lines,  gas  companies, 
express  companies,  telegraph  and  telephone  companies,  and 
electric- lighdng  companies  at  a  ridiculously  low  figure  be- 
cause they  include  licenses  for  them  under  the  general  license 
system.  Baltimore  pursues  a  more  rational  policy  with  ref- 
erence to  street-car  companies,  in  imposing  a  license  fee  on 
them  of  nine  per  cent,  of  gross  revenues,  in  addition  to  a 
license  charge  of  S5  for  each  car,  and  in  addition  to  the 
regular  tax  which  they  pay  to  state  and  city  on  the  value  of 

'  On  the  sami;  principle  ihc  license  tan  in  Savannah  of  J;oO  on 
"every  owner,  proprietor,  or  keeper  of  a  'bucket'  shop,  or  a  place 
where  Mulures'  are  sold,"  might  be  commendeil.  Perhaps  it  ought  ta 
be  four  timei  u  high. 


AMERICAN  FINANCIAL   SYSTEMS. 


real  and  personal  property.     In  1887  the  city  of  Baltimore 
received  from  licenses  for  street-car  companies  $131,167.26, 


Poll  taxes  exist  in  most  of  the  Southern  and  New  England 
states  and  in  some  of  the  other  states.  Poll  taxes  are  un- 
worthy of  a  civilized  nation  in  the  nineteenth  century.  They 
are  to  be  rejected,  also,  from  purely  economic  grounds.  In 
order  not  to  be  impossible  of  collection  without  great  hard- 
ship, they  must  be  so  low  as  to  yield  little  to  the  public 
treasury.  Poll  taxes  are  both  state  aod  local.  In  some 
states  only  state  poll  taxes  are  known,  but  in  others  both 
state  and  local  poll  taxes  exist  This  is  the  case  in  North 
Carolina.  Charlotte,  for  example,  levies  a  poll  lax  of  {2.10 
on  each  male  between  the  ages  of  twenty-one  and  fifty  years, 
and  the  state  collects  a  poll  tax  on  males  between  thcsame 
ages,  which  may  not,  however,  exceed  the  state  tax  on  $300. 
Other  facts  about  poll  taxes  will  be  found  in  Part  IV. 

The  right  of  suffrage  is  often  made  conditional  on  the  pay- 
ment of  a  poll  tax,  but  this  condition  only  gives  rise  to  cor- 
niption.  It  is  well  known  that  in  New  England,  before 
election,  the  political  parties  pay  the  poll  taxes  of  delin- 
quents, in  order  to  secure  their  votes.' 

The  road  tax  is  often  of  the  nature  of  a  poll  tax.  This 
is  the  case  in  Atlanta,  Georgia,  where,  as  already  mentioned, 
it  amounts  to  J3.50,  Adanta  is  the  only  place,  so  far  as  I 
know,  where  anything  like  a  poll  tax  is  strictly  collected,  and 
here  it  is  done  by  compelling  those  who  can  not  or  H'ill  not 
pay  the  road  duty  in  cash,  to  work  for  ten  days  on  the  high- 


'The  Pennsylvania  legislature  of  1887  pnssed 
nstilulion  nboliihing  the  pa>menl  of  a  poll  li 


rniimenl  lo  the 


tvt 


TAXATION  AS  IT  IS. 


WAyt.    The  undemocratic  character  of  a  high  capitation  tax  I 
btLO  that,  having  no  reference  to  the  abilities  of  the  lax- 
jk^ycrs,  is  sufficiently  obvious.     Georgia  has  a  stale  poll  tax 
k>l'  if  i.oo,  but  it  is  not  rigidly  collected. 

A  competent  and  well-informed  lawyer  of  Macon,  Georgia, 
writcn  me  as  follows  about  the  poll  tax  in  his  slate  : — 

"  'I'here  is  no  poll  lax  in  Macon,  other  than  the  poll  tax  \ 
of  (i.oo  imposed  by  the  state  on  a!!   its  citizens.     It  is    \ 
not  rigidly  collected  by  the  state  tax  officials  in  this  county. 
If  a  man  has  no  money,  the  tan  cannot  be  collected,  unless    i 
he  cams  wages.    In  the  latter  event  (inasmuch  as  the  state's    i 
Ijcri   for  taxes  is  paramount  to  all  exemptions)   the  daily, 
weekly,  and  monthly  wages  of  the  delinquent  may  be  reached 
liy  process  of  garnishment  sen*ed  upon  his  employer.    I  have 
heani  of  but  one  county  in  the  state  where  the  poll  taxes  are 
thoroughly  collected.     It  was  done  there  by  the  method  I 
have  just  mentioned.    All  the  farmers  and  others  who  em- 
ployed hands  were  garnished,  and  in  that  way  the  wages  J 
were  reached. 

"The  only  years  in  which  a  general  collection  is  made  of  ' 
poll  taxes  are  those  in  which  elections  are  held  under  the 
local  option  laws.  In  these  elections  the  liquor  men  who 
are  able  to  draw  upon  the  inexhaustible  resources  of  the 
whiskey  ring  pay  all  the  poll  taxes  of  the  negroes  and  pauper 
whites  who  will  vote  the  'wet'  tickcl.  Payment  of  taxes  is  a 
condition  precedent  to  voting.  These  elections  have,  there- 
fore, brought  into  the  treasury,  in  this  way,  large  amounts 
of  money  which  would  otherwise  never  have  been  col- 
lected. 

"There  is,  in  addition  to  the  state  poll  tax  of  li.oo,  i 
street  tax  of  53.00,  imposed  by  the  municipality.     This  is  1 
per  capita,  and  without  reference  to  the  individual's  prop; 
erty.    The  poor  people  do  not  work  it  out.    If  a  person  h 


AMEKICAfir  FINANCIAL   SYSTEAfS. 


211 


no  property  he  does  not  pay  the  tax,  unless  he  does  so  with 
the  object  of  retaining  his  municipal  suffrage,  which  he 
would  forfeit  if  he  was  in  aireais  for  taxes, 

"  It  frequently  happens  in  municipal  elections  that  the 
respective  candidates  furnish  the  money  to  such  of  their 
supporters  as  are  tax  delinquents,  for  the  purpose  of  en- 
abling them  to  vote." 

A  friend  from  Georgetown,  Kentucky,  equally  compe- 
tent to  speak  on  taxation,  writes  me  as  follows  about  poll 
taxes  in  Kentucky  :  — 

"The  poll  tax  in  many  counties  is  quite  heavy,  but  there 
is  no  way  of  enforcing  payment,  and  there  is  always  a  very 
Urge  list  of  citizens  from  whom  it  is  never  collected.  The 
sheriff  is,  at  the  end  of  the  year,  credited  by  the  county 
court  with  the  number  of  polls  in  the  'delinquent  list,'  and 
that  is  the  end  of  the  matter.  This  list  of  delinquents  is 
quite  large,  though  it  is  impossible  lo  say  exactly  how  lai^c 
in  all  the  counties.  In  our  county  (Scott  County)  it  has, 
for  the  last  few  years,  included  from  something  over  one- 
third  to  considerably  over  one-half  of  the  legal  voters  in  the 
county,  Scott  County  is  very  far  above  the  average  county 
in  the  state  in  point  of  wealth,  etc.,  and  I  therefore  have  no 
hesitation  in  saying  that,  taking  the  state  as  a  whole,  the 
number  of  those  who  fail  every  year  to  pay  their  poll  tax  is 
much  more  than  one-half  the  voters. 

I"  There  has  been  some  talk  in  the  legislature  of  making 
failure  to  pay  poll  tax  a  misdemeanor,  but  as  yet  there  is  no 
way  of  compelling  payment  by  those  who  have  no  visible 
property.  They  are  not  made  to  work  on  the  highwa)'s. 
The  latter  are  maintained  in  most  of  the  counties  in  the 
old-fashioned  way — a  supervisor  calls  out  all  the  men  in 
his  district  and  makes  them  work  the  road  at  intervals  in  the 
year.     A  few  counties  have  a  road  tax  and  apply  the  pro- 


m 


TAXATION  AS  IT  IS. 


I 


ceeds  to  road  purposes  in  the  more  modem  way,  but  the 
bulk  of  the  state  is  under  the  old  system." 

A  prominent  state  official  of  Wisconsin  writes  me  as  fol- 
lows regarding  the  jroll  tax  in  this  commonwealth  :  — 

"  Yes,  we  have  a  poll  tax,  d it.     I  think  if  it  were  or 

could  be  collected,  I  would  favor  a  poll  tax,  but  only  those 
who  pay  other  taxes  are  now  compelled  to  pay  on  their 
poUs.  You  see  how  that  is ;  when  I  go  to  pay  my  other 
tax,  they  add  on  the  Si.oo  for  my  poll ;  but  all  who  have  no 
personal  property  or  real  estate  tax  escape  poll  taxes,  as  they 
do  not,  as  a  matter  of  course,  go  to  the  tax-gatherer's  office, 
and  the  collector  never  goes  after  or  makes  a  list  of  them. 
Now  the  poll  tax  was  intended  to  reach  the  very  class  it  never 
touches,  in  order  to  reduce  the  burdens  of  those  owning 
property ;  but  in  reality  it  doesn't  gain  a  dollar  from  the  un- 
taxed, while  it  adds  more  burdens  to  those  who  already  pay 
their  lull  share,  and  for  whom  the  tax  was  designed  to  be  a 
relief." 

SPEXriAL    ASSESSMENTS. 

Special  assessments  on  property  benefited  by  local  im- 
provements are  common  in  American  cities.  New  streets 
are  sometimes  paid  for  entirely  by  those  through  whose 
property  they  pass,  and  sometimes  the  expense  is  divided. 

In  Baltimore,  pavements  are  paid  for  by  the  property- 
owners  and  the  city.  The  city  pays  one-third  and  the 
abutting  property-owners  on  either  side  pay  each  one-third. 
Occasionally  streets  are  paid  for  entirely  by  general  taxes. 
This  does  not  seem  right.  Although  taxes  are  not  payment 
for  services  rendered,  it  seems  perfectly  proper  that  those 
who  receive  a  marked  and  special  advantage  should  pay 
more  than  others  for  the  improvements.  Improvements  of 
the  nature  of  parks  and  avenues  are  often  paid  for,  in  part 


AMERICAN  FINANCIAL   SYSTEMS. 


213 


I 


at  least,  by  those  who  derive  a  special  pecuniary  advantage 
from  their  proximity.  This  has  recently  happened  in  Balti- 
more in  connection  with  the  Ml.  Royal  Avenue  extension. 
It  is  proposed  that  those  who  derive  a  special  advantage 
from  the  contemplated  small  paiks  in  New  York  City  shall 
pay  a  special  tax.' 

OTHER  SOURCES   OF  REVENUE. 

"Conscience  money"  is  a  heading  frequently  seen  in 
state  and  local  financial  reports,  but  geaerally  for  small 
sums.  As  probably  nearly  all  readers  understand,  it  is 
money  sent  without  the  name  of  the  sender  to  the  public 
treasury  by  some  one  who  has  defrauded  the  government  by 
withholding  money  due,  or  otherwise,  and  who  has  been 
pricked  by  his  conscience.  Our  federal  government  receives 
conscience  money  frequently,  and  occasionally  sums  of  some 
importance.  It  is  said  that  Wiirtemberg  and  England  are 
the  only  other  countries  in  which  conscience  money  is  a 
frequent  item  in  the  budgets.  It  has  been  remarked,  how- 
ever, that  the  legislation  of  other  countries  may  not  be  of 
such  a  character  as  to  lead  so  frequently  to  fraud.' 

Public  property  and  public  works  yield  more  considerable 
revenues  in  American  states  and  cities  than  is  ordinarily 
imagined.  The  reader  will  find  in  Part  IV.  as  complete 
information  on  this  point  as  I  could  gather.  Here  only  a 
few  illustrative  facts  will  be  presented. 

South  Carolina  owns  phosphate  beds  below  the  river  bot- 
toms, and  from  a  royalty  on  the  phosphates  obtained  from 
them  she  is  able  to  defray  over  twenty  per  cent,  of  all  her 


.,  on  ■'  Taialion  by  Special  / 


^^1  '  On  thU  lubject  kc  Chnpler 

^H  9  .^«  Heiretich,  in  Schonbeig'i  "  Handbuch  det  Piditiichfa  Oe1u» 

^^1       nomie,  2d  edition,  Vulume  III.,  page  i6g. 


214 


TAXATION  AS  IT  IS. 


expenses.  A  plan  has  even  been  proposed  for  working  tbese 
beds  by  ihe  stale  and  defraying  all  expenses  from  the  pro- 
New  York  state  has  derived  over  15,000,000  revenue 
from  the  stale-owned  salt-works  of  the  Onondaga  rescrva- 
tion. 

Georgia  derives  8300,000  from  the  rental  of  the  Atlanta  & 
West  Point  Railroad.  The  total  receipts  for  the  year  ending 
September  30,  1886,  were  ^4, 220,130.30.  This  sum  includes 
Ja, 508, 850  received  from  the  sale  of  bonds,  and  applied  to 
payment  of  state  debt.  The  rental  of  a  single  railroad  de- 
frayed about  seventeen  per  cent,  of  all  the  ordinary  expenses 
of  the  state.  During  the  same  year  the  slate  received  from 
the  Bank  of  Rome,  818,197.61,  and  from  dividends  from 
stocks,  $2,410. 

The  stale  of  Illinois  receives  seven  per  cent,  of  the  gross 
revenues  of  the  Illinois  Central  Railroad  as  a  special  charter 
tax.  This  ought,  however,  to  be  regankd  as  a  p>ayment  for 
a  privilege,  like  the  percentage  of  street -car  receipts  claimed 
by  Baltimore,  and  not  as  a  lax.  It  is,  indeed,  inadequate 
payment  for  what  the  road  has  received  from  the  public. 
For  ihe  two  years  ending  October  i,  1886,  the  receipts  of 
the  public  treasury  of  Illinois  amounted  to  84,666,443.85, 
of  which  the  Illinois  Central  Railroad  paid  8715,307.93,  or 
over  fifteen  per  cent. 

Massachusetts  has  redeemed  over  one  hundred  acres  of 
land  now  in  the  "  Back  Bay  "  district  of  Boston,  which  was 
formerly  under  water.  TTie  total  net  proceeds  in  cash  value 
amounted  to  84,275,644.73.  Tiiis  was  the  amount  which 
accrued  to  the  stale  after  paying  all  expenses  and  making 
donations  of  land  to  Boston,  lo  Trinity  Church,  to  the  Mas- 
sachusetts Institute  of  Technology,  to  the  Boston  Society  of 


AMERICAN  FINANCIAL   SYSTEMS.  215 

Natural  History,  and  to  the  State  Board  of  Education  for 
the  Normal  Art  School.' 

Many  of  our  states  have  money  invested  in  bonds,  on 
which  they  receive  interest.  Several  of  them  own  all  their 
own  bonds  ;  others  own  their  own  state  bonds,  local  bonds, 
federal  bonds,  railroad  bonds,  and  the  like. 

States  and  cities  have  sinking  funds,  and  moneys  devoted 
to  this  fund  are  used  for  the  purchase  of  bonds  and  other 
property  to  pay  off  debts  at  the  expiration  of  a  period,  usu- 
ally prescribed.  States  and  cities  also  hold  trust  funds,  the 
income  of  which  is  used  for  the  puri>oses  determined  by  the 
nature  of  the  tnist  itself.  In  January,  18S7,  Massachusetts 
had  properly  in  the  sinking  fund  valued  at  £18,964,412,  and 
in  trust  funds,  chiefly  for  educational  purposes,  bonds  and 
notes  valued  at  83,307,9 10.2 7.  A  ijart  of  the  trust  funds 
consists  of  money  deposited  by  the  United  Stales  with  Mas- 
sachusetts in  1837,  when  the  federal  surplus  was  distributed 
among  the  states.  Several  of  the  states  still  hold  the  amount 
then  received  in  trust  for  educational  purposes. 

New  York  state  holds  trust  funds  invested  chiefly  in  bonds 
of  various  descriptions.  The  funds  of  New  York  slate 
amounted  to  188,706,488.52  on  September  30,  1887,  which 
sum  yielded  nearly  ^550,000  revenue.  The  revenues  of  the 
funds  are  used  mainly  for  educational  purposes.  West 
Virginia  has  an  educational  fund  which,  like  that  of  New 
York,  cannot  be  abolished  without  a  change  in  the  state 
constitution. 

One  of  the  municipal  public  documents  of  Philadelphia 
is  the  annual  report  on  trusts.  The  principal  one  is  the 
Girard  trust,  now  worth  a  good  deal  over  ten  millions  of 
dollars.  Philadelphia  owns  gas-works  which  figure  in  the 
budget  of  1887  for  receipts  of  nearly  three  millions  of 
'  Auditgr'»  Report,  1886,  pages  365-6, 


216 


TAXA  TION  AS  IT  IS. 


dollars.    Richmond,  Virginia,  defrays  a  considerable  portion 
of  her  expenditures  from  the  profits  on  gas-works. 

New  York  City,  like  Baltimore,  now  receives  an  income 
from  a  portion  of  gross  revenues  of  street-car  lines,  and,  had 
not  the  people  been  plundered  in  a  most  shameful  manner, 
New  York  might  probably  now  defray  three-fourths  of  her 
expenses  from  public  proper^. 


CHAPTER  X. 

THE     TESTIMONY    OF    REASON. 


STATES  NOT   INDEPENDENT  IN  MATTERS   OF  TAXATION. 

WE  must  now  turn  from  actual  experience  and  ask 
whether  there  are  any  reasons  in  the  nature  of  things 
which  make  experience  what  it  is.  It  is  not  enough  to  show 
that  a  thing  never  has  been  done,  to  induce  a  rational  man 
to  desist  from  efforts  to  accomplish  it,  for  we  all  know  that 
brilliant  success  has  ollen  waited  on  him  who  refused  to  be 
convinced  by  a  thousand  failures.  It  is  necessary  to  show 
that  a  thing  cannot  in  all  probability  be  done. 

Il  should  first  be  remembered  in  any  treatment  of  the 
subject  of  taxation,  [hat  any  single  American  commonwealth 
like  Maryland  is  not  an  industrial  unit,  but  simply  a  part  of 
a  larger  whole  —  the  United  Stales.  Even  the  United  States 
in  its  economic  affaire  is  not  by  any  means  entirely  inde- 
pendent, but  it  must  often  have  regard  to  proceedings  of 
other  governments  if  it  would  act  wisely.  Still,  the  United 
States,  taken  together  as  one  country,  may  fairly  be  regarded 
as  an  industrial  unit,  and  in  matters  of  direct  taxation  it  need 
not  inquire  very  minutely  into  the  industrial  situation  in 
foreign  lands.  A  single  state  is  in  an  essentially  different 
position,  and  may  be  well-nigh  ruined  by  a  failure  to  lake 
into  consideration  interstate  relations. 


TAXATION  AS  IT  IS, 


RETURNS     ON     PROPERTV     OF     A     HIGH     DEGREE    OF    MOBF 
DEPENDENT    ON    GENERAL    CONDITIONS. 

There  is  a  species  of  property  which  floats  about  from 
place  to  place  with  ease.     VVc    may  say  that  property  of 
this  sort  is  endowed  with  a  high  degree  of  mobility.     This 
is  the    ease,  for   example,  with    money   for  investment 
mortgages  or  other  securities.     Now,  the  remuneration  for  ] 
properly  of  this  sort  is  to  a  large  extent  independent  of  the  j 
laws  of  a  single  state  like  Maryland.      If  in  our  state  it  is 
pressed,  it  will  leave  us  for  other  regions,  where  il  is  morel 
favorably  treated.     We  may  like  this  or  not,  but  as  men  of  I 
sense  we  cannot  wisely  shut  our  eyes  to  the  fact.     It  has  J 
ever  been  laid  down  as  a  maxim  of  taxation  that  only  those  J 
things  should  be  taxed  which  cannot  leave  us ;   and  those  \ 
who  advocate  this  rule  of  action  do  not  have  in  view 
special  interests  of  holders  of  such  property,  but  the  general  I 
welfare.     I  would  not  wish  to  be  understood  as  advocating  I 
this  maxim  without  any  qualification,  but  it  appears  to  me  f 
clear  that  the  legislature  should  always  keep  in  mind  the  1 
distinction  between  property  which  can  and  property  which 

From  the  time  of  Turgot  and  Adam  Smith  to  the  present,  ] 
political  economists  have  not  ceased  to  warn  people  to  be  1 
careful  not  to  drive  capital  abroad  by  taxing  it,  and  they  J 
have  often  in  their  timidity,  gone  too  far  in  this  direction  I 
and  at  limes  indeed  appear  to  have  given  loo  much  heed  to  ■] 
what  amounted  to  litde  more  than  blustering  threats  on  the  I 

1  ujijever  lax  anything  that  would  be  of  value  to  your  lUte,  that  I 
could  and  would  run  away,  or   that  could  and  would  come  lo  yi 
Quoled   from  a  pRmpblel  entitled  "The  Tax  Queaiion,"   by   Ei 
EniUy,  of  Memphii,  Tcnnetace,  187J. 


L 


THE    TESTIMONY   OF  REASON. 

part  of  tax- dodgers.  Nevertheless,  no  practical  man  can  fiil 
to  move  caretutly  in  this  matter.  When  those  who  do  not  1 
American  institutions  talk  about  taking  their  capital  away 
from  the  United  States,  an  amused  smile  of  incredulity  may 
be  a  sufficient  reply.  Where  will  they  go?  Where  else  will 
their  capital  be  so  well  protected,  and  at  the  same  time 
yield  so  large  a  net  return  after  defraying  the  burden  of 
taxation  ?  When  we  are  concerned,  however,  with  a  single 
state  like  Maryland,  the  case  is  essentially  different.  Capital 
of  any  high  degree  of  mobility  does,  as  a  matter  of  fact, 
readily  flow  from  state  to  stale,  and  this  interstate  move- 
ment of  floating  capital  was  never  so  easy  as  it  is  to-day. 
Special  companies  have  been  formed  to  encourage  this 
movement,  and  it  is  to-day  often  practically  as  easy  through 
their  assistance  to  invest  money  in  a  mortgage  a  thousand 
miles  from  one's  home  as  in  a  mortgage  on  land  in  one's 
own  country. 

The  normal  returns  on  floating  capital  are  then  deter- 
mined by  general  conditions  in  the  United  Stales,  and  over 
these  we  have  comparatively  little  control.  If  our  tax  laws 
operate  to  depress  the  returns  on  floating  capital  far  below 
what  we  may  regard  as  th^ir  nurmal  level,  a  portion,  and  a 
considerable  portion,  of  our  capital  will  leave  us  to  our  c 
detriment.  The  result  will  l>e  that  the  farmer  will  find  a 
poorer  home  market  for  his  produce,  on  account  of  dimin- 
ished wealth  in  the  state,  while  his  lands  will  fall  in  value, 
and  the  workingman  will  likewise  suffer  from  fewer  oppor- 
tunities for  profitable  employment  of  his  services.  The 
money-lender  will  take  his  transportable  commodity  away 
from  us,  and  instead  of  placing  upon  him  a  fair  share  of  the 
public  burdens,  we  will  simply  injure  those  who  would 
borrow. 

important  to  consider  this  well.     A,  is  a  young  man 


220  TAXATION  AS  IT  IS. 

who  wishes  to  acquire  a  home  by  savings  from  a  not  ' 
generous  income.  Is  he  benefited  by  laws  which  make  it 
difficult  for  him  to  borrow  money  with  which  to  build  a 
house  or  purctiase  a  bit  of  land?  If  the  money-lender  were 
walled  up  within  the  boundaries  of  Maryland,  it  might  be 
that  this  young  man  could  regard  with  indifference  projects 
for  taxing  the  desired  loan ;  but  as  he  is  only  one  of  many 
possible  borrowers  throughout  the  length  and  breadth  of 
the  land,  I  do  not  see  how  he  can  escape  loss  by  any  ab- 
normal burden  placed  upon  the  lender  of  capital.  Mort- 
gages are  exempt  from  taxation  in  the  state  of  Maryland, 
Does  any  one  think  that  money  could  be  had  on  mortgages 
in  the  city  of  Baltimore,  for  five  per  cent.,  if  they  were 
taxed  as  other  property  is  taxed,  namely,  J1.78J  on  ^100?' 
Turning  this  matter  over  in  my  mind,  and  looking  at  it 
from  every  possible  standpoint,  I  fail  to  see  how  this  ex- 
emption of  mortgages  is  a  special  favor  conferred  on  money- 
lenders. It  is  an  exemption  which  makes  the  flow  of  capital 
to  us  easier,  and  the  benefits  are  thus  diffused  throughout 
the  community. 

I  am  aware  that  this  is  a  point  which  has  been  much  dis- 
cussed among  the  farmers  of  Maryland,  and  that  many  of 
them  have  criticised  the  exemption  with  a  good  deal  of 
severity.  1  protest  that  no  one  has  a  friendlier  feeling  for 
the  farmers  of  Maryland  than  I ;  nor  do  I  need  to  be  told 
anything  about  the  burdens  which  rest  upon  the  farmer,  and 
the  hardships  which  he  must  undergo.  No  one  has  a  more 
active  sympathy  with  the  trials  of  the  farmer,  for  I  know  all 
about  them  by  personal  experience,  having  lived  the  first 
eighteen  years  of  my  life  on  a  farm,  and  having  had  for  a 
time  its  exclusive  management.  Neverlheless,  I  cannot  see 
how  the  farmer  is  to  gain  anything  by  special  taxes  on  mort- 
1  The  tale  for  iSSS  is  fz.oj). 


I 


THE   TESTIMONY  OF  REASON.  21\ 

gages  or  floating  capital.  Hb  desire  to  see  the  burdeos  of 
government  distributed  among  the  people  in  proportion  to 
their  ability  to  bear  them,  is  just,  but  he  must  obtain  his  end 
by  other  means. 

Money  invested  in  mortgages,  as  well  as  other  capital  a{  a 
ligh  degree  of  mobility,  is  taxable  by  law  in  most  states  of 
the  American  Union,  but  as  a  mailer  of  fact  it  nearly  every- 
where escapes  taxation.  Now  the  returns  on  this  kind  of 
capita],  especially  in  the  form  of  interest,  are  adjusted  to 
this  practical  exemption.  This  is  seen  in  the  fact  that  il  has 
actually  happened  that  the  tax  rate  has  in  places  exceeded 
the  current  rate  of  interest,'  which  could  not  happen  if  a 
man  expected  to  be  taxed.  Otherwise,  he  would  be  plan- 
ning to  pay  for  the  privilege  of  lending  some  one  money. 
Nearly  everywhere  the  rale  of  interest  on  good  s 


'  A  striking  case  of  oppression  narraleJ  in  the  second  "  Report  of  the 
New  York  Tax  Commisaiun  "  in  these  words  serves  as  an  illualralion  of 
Ibis  fact:  "The  following  cuiiuus  instance  of  hardship  in  taxing  mort- 
gages acliully  occurred  in  one  of  ihe  counties  of  central  New  York 
within  the  last  sii  years.  A  worthy  farmer  and  his  wife  finding  IhEin- 
selves  becoming  incapaciluted  through  age  from  taking  personal  care 
of  tbcir  little  faim.  Fold  il  for  Ijooo,  and  aliowed  the  purchase  money 
to  remain  in  the  form  of  a  mortgage,  with  the  expectation  uf  living  on 
the  interest  paid  annually  by  the  purchaser  from  the  profits  of  the  farm. 
The  town  being  very  small,  the  fact  of  the  sale  and  the  consideration  be. 
came  known  to  every  one.  and  assessors  were  compelled,  in  opposition 
to  their  usual  practice,  to  tax  the  oM  man  to  the  fall  amount  of  the 
mortgage,  bs  personal  property.  But  the  year  in  which  this  was  done 
bap]>ened  to  be  a  year  in  which  the  town,  anxious  to  avoid  a  draft  of 
men  for  the  army,  to  which  the  old  man  was  not  liable,  put  up  the  rale 
of  taxation  to  more  than  the  legal  rate  of  interest,  in  order  to  provide 
infficient  money  to  purchase  recruils.  The  result  was  that  the  poor  old 
man  and  his  wife  found  thai  not  only  was  thefr  income  from  the  mort- 
gage iwept  away  hv  the  tai-eollectoi.  but  Ihev  were  even  oWtRed  to  go 
lor  day's  work,  in  order  to  pay  a  balance  of  taiiation  and  provide 


i 


222  TAXA  TION  AS  IT  IS. 

American  cities  is  so  low  and  the  tax  rate  so  high  that  if  ftl 
man  paid  the  taxes  legally  due  from  him,  his  income  would  J 
be  far  lower  in  proportion  to  his  means  than  those  who  J 
make  other  investments.  This  fact  in  itself  discloses  the  \ 
actual  practice  with  sufficient  plainness.' 

A   man   turns  over  various  kinds  of  investments  in  his  I 
mind  and  balances  them  against  one  another  in  this  fasb^  I 
ion  :  "  Real  estate  yields  so  much  gross ;  taxes,  repairs,  and  I 
insurance  deducted,  I  have  so  much  net.     Money  placed  1 
out  on  interest  will  yield,  let  us  say,  five  per  cent.,  but  it  is 
practically  exempt  from  taxation.    I  will,  therefore,  lend  the 
money  to  A.  which  he  desires."    Is  it  not  sufficiently  evident 
that  the  rate  of  interest  on  such  investments  would  necessarily 
rise  if  they  were  taxed  ? 

The  vital  practical  point  in  the  discussion  is  tliis 


means  or  support,  and  this,  too,  while  the  idenlical  farm  fur  which  the  J 
miirlgage  was  given  wu  taxed  at  one-liftb  in  imc  value,  and  olhcr  ii 
veslmcnls  of  other  cilizcns  of  an  invisible  and  inlangihle  charactei  ui 
doubledly  eicaped  taialion  altogether.     And  this  wc  call  ctjuality  in  1 
laxRlion  1  "    The  report  from  which  thi«  ii  taken  appeare<l  in  167X1 
The  event  to  which  reference  is  made  evidently  occutted  about  1865. 

>  The  rate  of  taiation  in  the  city  of  Nashville,  Tenn.,  for  all  par. 
poses,  stale  and  1dc.i1,  vita  about  three  pec  cent,  on  the  value  of  propyl 
erty  fifteen  years  ago,  and  il  was  at  thai  time  about  four  and  one-half  | 
per  cent,  in  Memphis,   as  I  learn   from   the  pamphlet  on  "The    Tu 
Question."  by  Mr.  BlniKh  Ensley,  to  which  refeience  has  already  been  1 
made.     The  rale  of  taxation  in  New  York  City  was  S2-16  on  the  | 
of  valuation  in  1S87.     Mayor  Hewitt  expressed  the  belief  in  a  recent  | 
message  thai  il  wonld  be  fa,  18  in  1888.     The  rale  of  (aialion  furs 
and  local  purposes  in  Baltimore  will  be  V207J  on  the  $100  of  vaiua 
in    1S8S.      How  cou'd  money  be  borrowed  foe  five  per  cent,  were  k 
taxed  in  these  cities?    Or  even  for  six  per  cent.?    Il  is  lo  be  furthei  | 
noticed  thai  the  rate  of  inlerest  in  great  cities  does  not  fluctuate  W 
the  rale  of  laxaliun.  which  il  would  show  some  tendency  tu  do,  wi 
loans  actually  t4icd. 


THE    TESTIMONY  OF  REASON. 


T2^ 


benefits  of  a  practical  exemption  of  any  sort  of  floating  capi- 
tal are  fully  ditTused  among  the  people  only  when  it  is  legaL 
A  lender  in  Baltimore  is  content  with  good  five  per  cent- 
mortgages,  because  he  knows  that  they  cannot  !>e  taxed.  If 
they  were  legally  taxable  as  in  other  states,  he  would  want 
six  where  he  now  takes  five.  He  would  say  ;  "  Probably  the 
mortgage  will  not  be  taxed,  but  it  is  uncertain,  and  I  must 
have  something  for  the  risk  I  run."  Often,  indeed,  the  risk 
is  transferred  to  the  borrower  by  making  him  agree  to  pay 
any  taxes.  The  case  with  other  floating,  invisible  capital, 
difficult  of  discovery,  is  similar.  So  long  as  it  is  taxable  by 
law,  no  special  inducement  is  offered  to  it  to  come  to  Mary- 
land, and  we  nevertheless  get  little  from  the  tax.  If,  how- 
ever, we  proclaim  to  the  world  that  certain  sorts  of  floating 
capital  are  in  Maryland  not  taxable,  but  that  their  exemption 
is  a  part  of  our  tax  system,  we  derive  the  greatest  possible 
amount  of  gain  from  an  exemption  of  that  which  is  for  the 
most  part  after  all  beyond  our  control,  and  the  benefits  of 
the  exemption  are  thus  most  widely  diffused.  We  remove 
all  premium  on  risk  and  tell  all  owners  of  capital,  of  the 
specified  kinds,  that  without  perjury  or  dishonesty  of  any 
kind,  they  may  make  investments  in  the  state  of  Mary- 
land. The  competition  among  lenders  must  thereby  be  in- 
creased, and  the  rate  of  interest  must  fall  correspondingly. 
We  are  benefited  thereby  because  we  need  this  species  of 
property.' 

The  experience  of  a  village  in  another  state,  which  came 
within  my  knowledge,  illustrates  the  extent  to  which  the  rate 

'  I  dUcuis  a.  conctete  case,  but  what  is  laid  will  be  found  to  be  gen- 
enlly  applicable  lo  American  Blale*  und  diin.  Fureign  countriei  like 
England  »nd  France  are  obviously  difleicnlly  situated.  Ptnperty  is 
more  readily  transferred  from  stale  lo  slate  of  the  Ameriam  Union  Ihan 
from  one  countrj  lo  another.     It  hai  been  found  in  Austria  that  • 


TAXATION  AS  IT  IS. 


I 


of  interest  on  mortgages  is  beyond  the  control  of  any  local 
authorities.  The  rate  of  interest  was  regulated  by  law,  and 
the  rate  was  high  enotigh  for  money  lent  on  good  security, 
provided  it  was  not  taxed,  and  as  a  rule  in  the  state,  it  was 
not.  It  so  happened,  however,  that  honest  and  intelligent 
assessors  succeeded  in  finding  personalty  in  this  village,  but 
the  result  was  that  it  became  difficult  to  borrow  money,  and 
the  comparatively  poor  who  wanted  loans  were  more  injured 
than  the  comparatively  rich  who  had  money  to  lend. 

Our  experience  in  Baltimore  is  instructive.  Our  present 
diligent  tax-collector,  on  entering  office,  very  properly  felt 
that  his  oath  amounted  to  something,  and  that  he  must  en- 
force the  laws  as  he  found  them.  He  consequently  began  a 
vigorous  search  for  personal  property,  to  the  apparent  con- 
sternation of  many  worthy  citizens.  It  was  discovered, 
however,  that  the  returns  on  capital  of  that  sort,  which  I 
have  described  as  capital  of  a  high  degree  of  mobility,  had 
been  adjusted  to  its  practical  immunity  from  taxation,  and 
that  they  were  so  small  that  the  lax  rate  was  felt  as  an  exces- 
sive load  for  tax-payers  to  carry.  Dissatisfaction  with  what 
was  regarded  as  practical  injustice  was  so  pronounced  that  it 
became  necessary  to  announce  to  tax-payers  that  those  who 
made  honest  and  voluntiry  returns  of  personal  property  of 
this  description,  would  be  dealt  with  fairly ;  in  other  words, 
they  would  be  taxed  only  on  part  of  their  property,  the  law 
to  the  contrary  notwithstanding. 

This  was  the  best  a  practical  man  could  do  under  our  tax 
laws.     Some  money  put  out  at  interest  or  invested  in  taxable 

small  tax  on  loans  has  not  afTecIcd  Ihe  rate  of  inttfcst  illhuugh  It  wai 
oollecled.  Roscher  letls  of  similar  experience  of  other  countcie*.  The 
federal  governmcnl  could  more  adyanlagcously  tax  raoncy  al  interest 
and  capitiJ  of  a  high  degree  of  mnliiliiy  ihan  the  stateii.  becauM  Mpitkl 
will  nol  readily  leave  the  United  Stale*  in  great  quantities. 


THE    TESTlMOrtY   OF  REASON.  22S 

bonds,  yielded  four  per  cent.,  or  less,  which  made  the  tax 
rale  of  51.78I  nearly  equal  to  an  income  tax  of  forty-five 

per  cent.  —  truly  exorbitant ! 

In  the  "  Majority  Report  of  the  Maryland  Tax  Commis- 
"  one  of  its  members  relates  the  cxperieoCe  of  a  consci- 
entious client  who  wished  the  valuation  of  his  personalty 
increased  from  S5000  to  Sjo,ooo.  When  told  that  his  book 
accounts  were  also  taxable,  he  declared  that  he  could  not  stand 
that,  owing  to  the  severity  of  competition  with  those  not  thus 
taxed;  and  he  did  not  go  before  tlie  Appeal  Tax  Court 
until  he  received  assurance  that  inquiry  would  not  be 
made  into  his  book  accounts,  in  consideration  of  his  a 
scientious  and  voluntary  discharge  of  his  duty  as  a  citiz 
Every  one  will  feel  instinctively  that  it  was  only  fair  and 
proper  for  the  Appeal  Tax  Court  to  act  as  it  did  in  t 
manner ;  that  any  other  course  would  have  been  mean 
well  as  disadvantigeous  to  the  city,  in  refusing  to  take  what 
they  could  get.  Yet  it  was  not  law.  This  is  the  point.  Do 
we  want  laws  which  we  cannot  enforce,  and  which,  by  the 
necessities  of  the  case,  educate  men  to  regard  an  oath, 
calling  upon  the  Almighty  to  witness  its  sanctity,  as  some- 
thing light  and  trivial  ? 

INTERFERENCE    OF    THE    FEDERAL    GOVERNMENT     IN     MATTERS 
CONCERNING   LOCAL  TAXATION. 

In  the  second  place,  we  are  not  independent  in  matters  of 
taxation  in  Maryland,  because  we  are  subject  to  federal  laws, 
over  which  we,  as  a  state,  have  no  control.  Federal  evi- 
dences of  indebtedness  are  not  taxable  by  our  states,  and 
under  our  existing  system  it  is  impossible  to  avoid  their  1 
for  purposes  of  evading  taxation  ;  and  the  facility  with  which 
they  can  be  used  for  these  purposes  is  an  important  element 
in  detennioiog  their  market  value.     It  is  diffictilt  to  see  how 


ZZ6  TAXATION  AS  IT  IS. 

the  federal  government  can  tolerate  local  taxation  of  its  evi- 
dences of  indebtedness  ;  for  if  it  does  so,  a  hostile  state  might 
destroy  their  value  by  taxation,  and  thus  by  indirect  methods 
Buccessfiilly  dispute  its  sovereignty.  At  any  rate,  we  have  in 
this  matter  a  fact  not  likely  to  be  changed,  and  any  rational 
system  of  taxation  for  an  American  commonwealth  will  be 
framed  with  due  reference  to  federal  laivs  and  institutions ; 
and  its  nalm-e  will  be  such  that  the  exemption  of  federai 
property  from  taxation  will  not  enable  l!ie  cunning  and  un- 
scrupulous to  escape  their  fair  share  of  slate  taxation.' 

Federal  interference  is,  however,  not  confined  to  exemp- 
tion from  taxation  of  federal  bonds  and  federal  property, 
Uke  post-offices,  custom  houses,  and  court  houses.  Im- 
ported commodities  cannot  be  taxed,  and  this,  with  the 
federal  internal  revenue  taxes,  makes  taxes  on  commodities 
a  practical  impossibility  in  our  states.  The  constitutional 
provisions  that  the  state  must  not  interfere  with  interstate 
commerce,  and  that  contracts  are  inviolable,  and  the  decision 
that  charters  of  private  corporations  are  contracts,  have  been 
made  an  excuse  for  an  invasion  of  state  sovereignty  in  matlera 
of  taxation,  which  the  most  ardent  federalist  of  the  last  century 
could  have  hardly  desired,  or,  at  any  rate,  contemplated  as 
a  possibility.  Drummers  or  agents  of  commercial  houses 
located  outside  of  a  state  in  which  they  solicit  trade,  cannot 
be  taxed,  because,  by  a  recent  decision  of  the  Supreme 
Court,  that  is  interfering  with  interstate  commerce.     It  may   i 


•  In  this  country 
Older  to  bring  about  harm 
teni  Ik)I1i  double  laxation  a 
national  lax  legislation  has 
prospecl  of  co-operadon  be 
atioD  IB  remote,  for  Iheii  ini 
oui  ichenics  of  t: 


has  been  suggested,  ii 
in  all  our  stales,  and  lo  j>r< 
tajalion.  Elsewhere  inlet 
for  the  same  purpose.  Th 
d  countries  in  iDatlcn  of  tai 
iveise.     It  is  betlci  to  ftdjui 


o  the  facts  which  cusl  at  picsenL 


THE    TESTIMONY  OF  REASON. 


thus  happen  that  residents  of  a  state  will  be  placed  at  a  dis- 
advantage as  compared  with  outsiders.  Care  is  necessary  in 
this  respect.  Prudence  must  be  exercised  in  taxation  of 
railroads,  or  it  will  be  found  that  laws  taxing  them  wiU  be 
nullified  by  a  federal  court,  on  the  ground  that  it  involves 
interference  with  interstate  commerce.  It  is  well  for  a  state 
in  this  matter  to  follow,  as  nearly  as  may  be,  the  laws  of  a 
state  like  Wisconsin,  which  has  had  experience  in  the  taxing 
of  railroads,  and  which  has  finally  (rained  its  laws  in  such  a 
manner  that  they  cannot  be  successfully  attacked  in  the 
courts  by  "  tax -fighters." 

Corporate  charier  exemptions  from  taxation  are  held  by 
the  Supreme  Court  to  be  of  the  nature  of  an  inviolable  con- 
tract, and,  consequently,  forever  irrevocable.  Thus  one 
legislature  can  forever  part  with  a  sovereign  power,  and  cor- 
porations are  granted  favors  which  cannot  be  shown  to 
natural  persons,  both  because  a  natural  person  dies  and  a 
privilege  would  not  pass  to  his  heirs,  and  because  a  natural 
person  is  not  called  into  being  by  a  legislative  act. 

The  interference  of  federal  courts  in  matters  of  state  and 
local  taxation,  added  to  the  interference  of  slate  courts  o 

I  account  of  the  endless  minutias  introduced  into  our  written 
state  constitutions,  produces  a  confusion  and  uncertainty 
most  damaging,  and  leads  to  ceaseless  and  wasteful  litigation. 
It  is  only  in  the  United  Stales  that "  tax  fighting  "  has  become 
a  regular  branch  of  the  legal  profession. 
When  one  studies  state  and  local  taxation,  it  is  difficult  not 
to  become  a  strict  constructionist  of  the  federal  constitution, 
just  as  when  one  studies  oiher  subjects,  like  tanking,  bank- 
ruptcy, divorce,  and  marriage,  one  sees  the  importanct 
increased  federal  powera.  The  truth  is,  modem  industrial 
developments  have  produced  new  conditions  with  which 
our  written  constitutions  do  not  correspond,  and  with  whkh 


228 


TAXATION  AS  IT  IS. 


they  are  likely  to  hannoniEC  less  and  less  every  year.  Yel 
it  is  said  that  it  is  now  practically  impossible  ever  to  change 
our  federal  conslitutioa.' 

A  federal  decision  which  interferes  with  the  otherwise  tol- 
erably satisfactory  workings  of  our  Maryland  system  of  taxing 
stocks  and  lionds  of  corjio rations,  and  which  leads  to  a 
practical  and  unjustifiable  immunity  of  large  amounts  of 
wealth  from  taxation,  is  given  in  this  quolation  from  the 
"  Majority  Report  of  the  Maryland  Tax  Committee  "  :  — 

"  We  appreciate  the  force  of  all  that  has  been  said  about 
the  difliciilty  of  enforcing  a  tax  upon  certain  classes  of  per- 
sonal property.  We  believe  that  the  situation  would  be  very 
much  improved  in  that  respect  if  all  the  states  would  adopt 
the  Maryland  system  of  collecting  taxes  on  stocks  and  bonds 
through  the  corporations  which  issue  them,  and  would  not 

1  So  Alexander  JohnstOD  in  Ibe  Old  Princilon  Review  b  wo.  article 
on  a  pro]>osal  to  call  a  Fe<i<;ral  Canatiiutional  Convention.  Thii  wu 
nol  at  all  ihe  inlenlion  of  out  Ciiielathcn  who  ealablished  thii  govern- 
ment. The  "  Report  of  the  Proceedings  and  Debates  of  the  Virginia 
State  Convention  of  1819-30,"  with  Ihe  constitntion  of  Virginia,  which 
was  drawn  up  by  thai  body,  lies  befure  loe.  It  wai  Kiid  to  have  been  A 
femarkable  convention.  Chief  Justice  Marshall  and  two  ei-PreiidenIs, 
Madison  and  Monroe,  were  memben.  The  motto  on  the  liile  page  ia 
thi>  sentence  from  the  Virginia  Bill  of  Rights:  "  No  free  government 
or  the  bleising  of  liberty  can  be  preserved  to  any  people  lint  by  a  Rnn 
adherence  to  justice,  moderation,  leni|icrani;e,  rrugalily.  and  virtue,  and 
by  frtquent  rceurrcnct  It  fundameiilnl  principles."  'ITie  italics  are  ia 
the  motto  on  ihe  title  page,  and  this  moiLo  wu  retained  as  an  article 
in  the  new  conslilution.  All  early  wrileis  contemplate  a  frequent  lecur- 
reoce  to  fundaniental  principles  for  Ihe  United  States,  but  the  constitu- 
tion hu  been  so  drawn  that  a  small  minority  ut  the  people  can  keep 
the  conitilulioD  as  it  is,  and  thereby  rule  a  large  mijotity.  It  iscuriauf 
to  notice  the  growing  aversion  of  monopolists,  and  those  who  under 
CKisling  coniitilutions  have  received  special  favors,  to 
fundamental  principles. 


THE    TESTIMONY  OF  REASON.  229 

attempt  to  tax  such  property  in  the  hands  of  the  individual 
bolder,  and  especially  if  the  states  would  abandon  the  effort 
to  lax  such  securities  io  non-resident  corporations.  Unfor- 
tunately the  Supreme  Court  of  the  United  States  has  held 
that  the  state  in  which  a  corporation  b  located  cannot  col- 
lect from  it,  out  of  the  interest  due  to  a  non-resident  holder 
of  its  bonds,  a  tax  upon  such  bonds,  because  the  situs  of  such 
property  follows  the  person  of  its  owner."  ' 

But  however  this  may  be,  the  fact  of  federal  interference 
in  state  and  local  affairs  must  not  be  overlooked  in  making 
laws  for  state  and  local  taxation. 

OUR  EXITING   METHODS   OF  TAXATION   KEEDLESSLY    DE- 
MO RAUZINC. 

We  must  next  remark  that  our  system  of  taxation  carries 
with  it,  as  an  essential  part  of  its  very  nature,  temptations 
which,  to  the  ordinary  man,  are  irresistible,  and  thus  need- 
lessly demoralizing,  k  wise  people  will  always  endeavor  to 
frame  institutions  so  in  accord  with  the  facts  of  human  na- 
ture that  the  temptation  to  lawlessness  may  be  reduced  to 
its  lowest  terms.  "  Lead  us  not  into  temptation  "  is  as  wise 
a  prayer  for  a  state  or  a  nation  as  for  an  individual.  Expe- 
rience shows  that  the  ordinary  man  wants  to  do  what  is  right 
in  the  main,  and  to  discharge  his  duties  to  the  common- 
wealth, but  the  ordinary  man  is  not  a  moral  hero.  He  will 
resist  temptation  to  a  certain  point,  but  when  the  pressure 
becomes  too  strong  he  yields.  To  deny  this  is  to  assert  that 
environment  has  no  influence  on  character,  and  to  claim 
that  it  makes  no  difference  where  a  child  is  brought  up, 
among  thieves  and  prostitutes  in  the  slums  of  a  ciQ',  or 
among  wholesome  surroundings  in  an  upright  and  Christian 

'See  R.  R.  p,  Pcnnsylvama.  IJ  Wall.  J13;  Kiiltsind  »,  Hulehkiss. 
lOQ  U.  S.  49"  ■ 


230 


T^XA  TION  AS  IT  IS. 


family !    an   ab5urdtt]r  which    needs  no    refutation.      Now,    ' 
practical  men,  in  framing  laws  and  political  institutions,  will 
act  with  due  reference  to  the  facts  of  human  nature. 

ITiere  is  a  tendency  on  the  part  of  the  unthinking  to  draw 
the  conclusion,  frotn  the  imperfections  of  human  nature,  that 
it  makes  no  difference  what  laws  and  institutions  we  have 
until  men  are  improved.  This  is  a  mistake.  The  imperfec- 
tions of  man  set  a  limit,  beyond  which  improvement  cannot 
go,  but  we  can  always  legitimately  ask  the  question.  Have  we 
yet  reached  that  limit?  The  old  stale  banking  system,  with 
frequent  failures  and  depreciated  bank  notes  of  local  circu- 
lation, and  all  its  many  other  iniquities  and  inconveniences, 
doubtless  seemed  to  our  fathers  fifty  years  ago  as  due  to  the 
imperfections  of  individuals ;  but  we  now  perceive,  that  taking 
men  as  we  find  them,  it  is  possible  to  construct  a  banking 
system  devoid  of  the  most  glaring  of  these  evils.  Thus  we 
have  likewise  witnessed  many  improvements  in  administra- 
tive methods,  based  simply  on  a  proper  appreciation  of  the 
facts  of  existing  human  nature.  Accounts  in  stale,  municipal, 
and  federal  government  are  more  and  more  being  so  kept 
as  to  remove  temptation  to  wrong-doing,  by  rendering  it 
difficult,  and  only  possible  by  conspiracy  on  the  part  of  sev- 
eral ;  and  the  results  have  been  so  satisfactory  that,  in  view 
of  recent  exjMJsures  of  ejnbezzlement,  fraud,  and  inefficiency 
in  private  business  concerns,  a  prominent  ne«-spaper  was 
moved  lo  ask  the  question,  whether  it  was  desirable,  after  all, 
to  introduce  business  methods  into  politics ;  whether  political' 
methods  might  not  be  better  introtluced  into  private  busi- 


This  couplet  is  frequently  repeated  ; 

"  Whoever  bopcs  a  faulllcss  tux  lo 
Hopes  whal  ttE'ci  waa.  is  nol,  an 


THE    TESTIMONY  OF  REASON. 


231 


I 


This  is  true,  but  it  is  unwarrantable  to  draw  from  this  the 
conclusion  that  existing  methods  of  taxation  cannot  be  im- 
proved. Between  ihe  practical  workings  of  various  systems 
of  taxation  in  various  lands,  and  in  various  parts  of  the  same 
land,  we  observe  a  wide  diversity,  and  a  still  wider  tliversity 
between  various  taxes  in  a  given  system.  Some  work  well, 
comparatively  speaking,  appeal  to  the  intuitive  feelings  of 
justice  in  the  community,  allow  business  to  proceed  without 
obstruction  in  its  natural  channels,  grow  in  favor  with  age, 
and  are  attended  in  their  administration  with  little  demoral- 
ization, imposing  upon  tax-payers  and  tax  officials  no  undue 
temptation  to  fraud  and  perjury.  Other  taxes,  on  the  other 
hand,  are  a  constant  source  of  irritation  and  annoyance,  are 
attended  with  growing  demoralization  and  perjury,  obstruct 
business,  foster  monopolies,  work  injustice  as  between  tax- 
payers, placing  upon  one  the  burden  of  another  and  failing 
to  adjust  burdens  so  as  to  fall  upon  each  with  equal  weight, 
and  finally  some  taxes  grow  in  disfavor  the  longer  ihey  last. 
It  is  our  part,  then,  while  discarding  Utopian  ideas  of  abso- 
lute perfection,  to  search  diligently  for  the  relatively  best  in 
taxation. 

It  is  further  a  matter  of  fact  that  many  of  the  problems 
which  now  vex  us  have  elsewliere  already  found  their  solu- 
tion. Baron  von  Reitzensiein,  a  man  of  large  practical  ex- 
perience, and  a  recognized  authority  on  taxation,  in  review- 
ing in  the  "  Arthiv  fiir  das  finanzwtsen,"  the  report  of  the 
Baltimore  Tax  Commission,  made  in  1886.  uses  these  words  : 
"  The  nature  of  these  proposals  discloses  a  condition  ol 
things  which,  in  comparison  with  what  exists  in  most  EurO' 
pean  states,  must  be  called  primitive.  They  ore  nearly  all 
concerned  with  questions  of  policy  and  of  administrative 
methods,  which,  among  us,  long  ago,  found  their  solution. 
Especially  does  the  provision  of  the  constitution  of  Mary- 


TAXATION  AS  IT  IS. 


land,  which  prescribes  that  the  only  direct  las  shall  be 
on  the  value  of  all  real  and  pereonal  property,  appear  as  an 
antiquated  constitutional  enactment.  It  shows  thj.t  in  this 
matter,  Maryland  has  lagged  far  behind  the  general  eco- 
nomic development." 

Our  present  system,  then,  must  be  rejected  as  not  answer- 
ing the  requirements  of  practical  morality.  It  is  thought 
necessary  at  every  step  to  re-enforce  it  with  oaths  of  citi- 
zens and  administrative  officers,  and  there  is  nothing  which 
so  blunts  the  conscience  as  the  frequent  oaths  in  our  politi- 
cal  life.  They  are  rattled  off  at  lightning  speed  by  clerks, 
are  taken  as  a  matter  of  form,  and  finally  lose  all  sanctity. 
'  Can  a  rehgious  person,  who  thinks  the  nation  under  Divine 
government,  regard  this  incessant  and  careless  appeal  to 
Deity  with  indifference  ?  Can  he  expect  that  we  will  con- 
tinue to  be  blessed  with  divine  favor,  unless  we  amend  our 
conduct  in  this  respect? 

There  can  scarcely  be  a  doubt  in  the  mind  of  any,  I 
think,  in  regard  to  actual  facts  with  respect  to  oaths.  Hon. 
David  A.  Wells  uses  the  following  language  on  the  subject, 
in  his  report  as  special  tax  commissioner  to  the  legisla- 
ture of  New  York  ;  "Oaths  as  a  matter  of  restraint  or  as  a 
guarantee  of  truth  in  respect  to  official  statements  have,  in 
a  great  measure,  ceased  to  be  effectual ;  or,  in  other  words, 
perjury,  direct  or  constructive,  has  become  so  common  as 
to  almost  cease  to  occasion  notice."  This  is  stated  to  be 
the  "  all  but  unanknous  testimony  of  officials  who  have  of 
late  had  extensive  experience  in  the  administration  of  both 
the  national  and  state  revenue  laws."  It  is  not  difficult  to 
find  confirmation  of  this  view. 

The  truth-telling  habit  and  truth-loving  spirit  may  be  said 
to  characterize  the  .\merican  people  in  a  high  degree,  but  it 
is  doubtful  if  anywhere  an  official  oath  signifies  less.    It  ji 


THU    TESTIMONY  OF  REASOJV. 


233 


Dccause  it  is  so  common.  In  my  opiaion,  oaths  should  be 
resorted  to  rarely,  and  then  should  be  surrounded  with  such 
solemnity  in  the  methods  of  administration  as  to  impress 
upon  all  their  Inie  nature.  While  a  resident  of  Germany  I 
was  much  struck  with  the  (act  that  oaths  were  often  refused 
when  it  was  supjjosed  that  the  temptation  to  perjury  was  too 
strong,  and  that  in  general  ihey  were  less  common  there. 
1  believe  the  effects  most  salutary.  However,  I  do  not  pro> 
fess  to  speak  on  this  matter  "  as  one  having  authority." 
This  is  a  subject  which  ought  to  receive  careful  attention 
&om  some  experienced  and  philosophical  jurisprudent. 

Our  system  of  taxation  lends  to  bring  the  morality  of  the 
commtmity  down  to  the  level  of  its  most  unscrupulous 
meinbeis,  and  that  in  this  way :  No  device  known  to  man 
can  enable  the  assessor  to  get  at  certain  classes  of  personal 
properly  in  the  hands  of  the  cunning  and  imscrupulous. 
They  make  false  returns,  and  their  neighbors  know  it ;  the 
entire  community,  in  fact,  knows  that  men  of  large  means  are 
not  bearing  their  fair  share  of  taxation  ;  people  feel  tliat  it  is 
an  iniquity  to  place  upon  them  burdens  which  properly  belong 
to  others,  and  so  they,  too,  make  inadequate  returns,  and 
still  the  voice  of  conscience  with  meaningless  quibbles. 
The  remarks  of  the  West  Virginia  Tax  Commission  on  this 
point  state  the  case  fairly  as  it  presents  itself  to  the  average 
man  :  "  All  persons  will  understand  that  they  must  compen- 
sate the  men  who  are  employed  by  them  to  administer  the 
aJTairs  of  government,  and  every  fair-minded  man  is  very 
willing  to  contribute  his  proper  share.  But  it  is  natural 
that  a  citizen  should  be  unwilling  to  pay  an  amount  greater 
than  his  just  proportion  ;  a  man  is  naturally  discontented 
when  he  feels  that  he  is  paying  a  tax  which  ought  to  be  paid 
by  somebody  else ;  we  are  reasonably  aggrieved  when  we 
are  forced  to  carry  that  part  of  a  load  which  belongs  prop* 


I 


23H  •  TAXA  TION  AS  IT  IS. 

erly  to  our  neighbors."  The  hmth  is,  the  ordinary  man 
simply  decides  that  he  will  not  da  it,  and  thus  it  is  that  the 
lax-dodging  which  begins  with  the  unscrupulous  few,  extends 
and  becomes  general. 

Another  aspect  of  this  case  is  presented  by  the  facts  of 
competition  in  business.  Those  who  escape  the  payment 
of  a  fair  share  of  business  taxes  have  an  advantage  in 
business  which  enables  them  to  undersell  their  competitors, 
and  when  a  business  man  sees  ruin  staring  him  in  the  face 
because  his  dishonest  neighbor  makes  false  returns  and 
pays  taxes  on  only  a  fractional  part  of  his  property,  the 
temptation  to  do  likewise  is  almost  irresistible,  except  for 
moral  heroes,  and  moral  heroism  cannot  be  made  the  basis 
of  governmental  action.  This  fact  of  sharp  competition 
must  be  kept  in  mind,  and  in  Mar}-land  we  must  remember 
that  the  competition  of  people  outside  of  Maryland,  espe- 
cially of  business  men  of  New  York  and  Philadelphia,  is 
keenly  felt.  We  must  be  careful  not  to  handicap  our  own 
people  in  the  race  of  competition. 


PART  III. 

TAXATION   AS   IT  SHOULD   BE. 


[ 


THE   PRINCIPLES   ON  'WHICH   A   NEW  SYSTEM   OF 
TAXATION   SHOULD   BE   BASED. 

ONE  who  would  frame  a  rational  system  of  taxation 
will  endeavor  to  find  taxes  which  cannot  well  be 
dodged,  and  will  avoid  a  tax  like  our  personal  property  tax, 
which  is  regressive,  increasing  the  relative  Inirden  as  strength 
to  bear  it  decreases. 

What  shall  be  proposed  in  view  of  all  these  circumstances  \ 
We  want  taxes  which  have  stood  the  test  of  experience,  and 
fthich  are  in  accord  with  the  spirit  of  the  limes.  Taxes  of 
fliis  sort  must  be  sustained  by  obvious  jirinctples  of  common 

use,  and  must  bear  upon  all  in  such  manner  as  to  require, 

neaiiy  as  may  be,  equal  sacrifice  from  each.  Equality  of 
sacrifice  is  the  aim  which  we  ought  to  keep  before  us  in  the 
construction  of  a  system  of  taxation. 

This  principle  is  fundamental,  anil  as  the  nature  of  taxation 
is  generally  so  little  understood,  i  will  quote  at  some  length 
the  lucid  remarks  of  John  Stuart  Mill  on  th:s  subject : '  — 

"For  what  reason  ought  equality  to  be  the  rule  in  the 
matter  of  taxation?  For  the  reawin  that  it  ought  to  be  so 
in  all  affairs  of  government.  As  a  government  ought  to 
make  no  distinction  of  persons  or  classes  in  the  strength  of 
their  claims  on  it,  whatever  sacrifices  it  requires  from  them 
should  be  made  to  bear  as  nearly  as  possible,  with  the  same 

PrinciplEi  of  Poiilical  Econmny,"  by  J.  S.  Mill,  Book  V.,  Ctuplet 


^  --m 


238 


TAXATIO.V  AS  IT  SHOULD  BE. 


pressure  upon  all,  which,  it  must  be  observed,  is  the  mode 
by  which  least  sacrifice  is  occasioned  on  the  whole.     If  any 
one  bears  less  than  his  fair  share  of  the  burden,  some  other 
person  must  suffer  more  than  his  share,  and  the  alleviation 
to  the  one  is  not,  on  the  average,  so  great  a  good  to  him 
as  the  increased  pressure  upon  the  other  is  an  evil.     Equality 
of  taxation,  therefore,  as  a  maxim  of  politics,  means  equality   . 
of  sacrifice.     It  means  apportioning  the  contribution  of  eactt'l 
person  towards  the  expenses  of  government,  so  that  he  shall  f 
feel  neither  more  nor  less  inconvenience  from  his  share  of  1 
the  payment  th.in  every  other  person  experiences  from  his. 
This  standard,  like  other  standards  of  perfection,  cannot  be 
completely  realized,  but  the  first  object  in  every  practical 
discussion  should  be  to  know  what  perfection  is. 

"There  are  persons,  however,  who  are  not  content  with' I 
the  general  principles  of  justice  as  a  basis  to  ground  a  rule  1 
of  finance  upon,  but  must  have  something,  as  they  think,  I 
more  specifically  appropriate  to  the    subject-     What  best  1 
pleases  them  is,  to  regard  the  taxes  paid  by  each  member 
of  the  community  as  an  equivalent  for  value  received,  in  the  \ 
shape  of  service  to  himself;  and  they  prefer  to  rest  the  jus-  J 
lice  of  making  each  contribute  in  proportion  to  his  means,    i 
upon  the  ground  that  he  who  has  twice  as  much  property  to  1 
be  protected  receives,  on  an  accurate  calculation,  f 
much  protection,  and  ought,  on   the  principle  of 
and  sale,  to  pay  twice  as  much  for  it.     Since,  however,  the  | 
assumption  that  government  exists  solely  for  the  protectioa 
of  property  is  not  one  to  be  deliberately  adhered  to,  ■ 
consistent  adherents  of  the  quid  pro  quo  principle  go  on  to  \ 
observe  that  protection  being  required  for  person  as  well  as   j 
for  property,  and  everybody's  person  receiving  the  sami 
amount  of  protection,  a  poll  tax  of  a  fixed  sum  per  head  i 
a  proper  equivalent  for  this  part  of  the  benefits  of  govern*  J 


A   RATIONAL  SYSTEM  OF  TAXATION. 


roent,  while  the  remaining  part,  protection  to  property, 
should  be  paid  for  in  proportion  to  properly.     There  is  in 

s  adjustment  a  false  air  of  nice  adaptation,  very  accept- 
able to  some  minds.  But,  in  (he  first  place,  it  is  not  admis- 
sible that  the  protection  of  persons  and  that  of  property  are 
the  sole  purposes  of  government.     The  ends  of  government 

:  as  comprehensive  as  those  of  the  social  union.  They 
consist  of  all  the  good  and  ail  the  immunity  from  evil,  which 

:  existence  of  government  can  be  made  either  directly  or 
indirectly  to  bestow.  In  the  second  place,  the  practice  of 
setting  definite  values  on  things  essentially  indefinite,  and 
making  these  a  ground  of  practical  conclusions,  is  peculiarly 
fertile  in  false  views  of  social  questions.  It  cannot  be  ad- 
mitted, that  to  be  protected  iii  the  ownership  of  ten  times 
as  much  property,  is  to  be  ten  limes  as  much  protected. 
Neither  can  it  be  tnily  said  that  the  protection  of  j^iooo 
costs  the  state  ten  times  as  much  as  that  of  ^loo  a  year, 
rather  than  twice  as  much  or  exactly  as  much.  The  same 
judges,  soldiers,  sailors,  who  protect  the  one  protect  the 
other ;  and  the  larger  income  does  not  necessarily,  though 
it  may  sometimes,  require  even  more  policemen.  Whether 
the  labor  and  expense  of  the  protection,  or  the  feelings  of 
the  protected  person,  or  any  other  definite  thing,  be  made 
the  standard,  there  is  no  such  proportion  as  the  one  sup- 
posed, nor  any  other  definable  proportion.  If  we  wanted 
to  estimate  the  degrees  of  benefit  which  different  persons 
derive  from  the  protection  of  government,  we  should  have  to 
consider  who  would  suITer  most  if  that  protection  was  with- 
drawn ;  to  which  question,  if  any  answer  could  be  made,  it 
must  be,  that  those  would  suffer  most  who  were  weakest  in 
mind  and  body,  either  by  nature  or  by  position.  Indeed, 
^  such  persons  would  almost  infallibly  be  slaves.  If  there 
^H     were  any  justice,  therefore,  in   the  theory  of  justice  now 


a« 


TAXATION  AS  IT  SHOULD   BE. 


under  consideration,  those  who  are  least  capable  of  helping 
or  defending  themselves,  being  those  to  whom  the  protec- 
tion of  the  government  is  the  most  indispensable,  ought  to 
pay  the  greatest  share  of  its  price  ;  the  reverse  of  the  true 
idea  of  distributive  justice,  which  consists  not  in  imitating 
but  in  redressing  the  inequalities  of  nature.  Government 
must  be  regarded  as  so  pre-eminently  a  concern  of  all,  that 
to  determine  who  are  the  most  interested  in  it  is  of  no  real 
importance.  If  a  pereon  or  class  of  perOTns  receive  so  small 
a  share  of  the  benefit  as  makes  it  necessary  to  raise  the 
question,  there  is  something  else  than  taxation  which  is 
amiss,  and  the  thing  to  be  done  is  to  remedy  the  defect,  in- 
stead of  recognizing  it  and  making  it  a  ground  for  demand- 
ing less  lajies.  As  in  a  case  of  voluntary  sub.scriptions  for 
a  purpose  in  which  all  are  interested,  all  are  thought  to  have  i 
done  their  part  fairly  when  each  has  contributed  according  i 
to  his  means,  that  is,  has  made  an  equal  sacrifice  for  the 
common  object ;  in  like  manner,  should  this  be  the  princi- 
ple of  compulsory  contributions ;  and  it  is  superfluous  to 
look  for  a  more  ingenious  or  recondite  ground  to  rest  the  , 
principle  \ipon." 

It  may  be  said,  and  truthfully,  that  it  is  difficult  to  teQ 
exactly  what  equality  of  sacrifice  means.     It  is  a  subjective 
idea, but  we  can  keep  before  us  as  an  ideal,  equality  of  sacriiice, 
and  approximate  to  it  as  neariy  as  may  be.      Our  notions 
of  justice  change,  but  at  each  moment  we  should  strive  to 
attain  justice,  using  such  lights  as  we  have.     Fair  price  and  < 
fair  rents  are   subjective  ideas,  and    yet   science,  law,  and    | 
theology  have  dealt  with    these  ideas.      Irish  land    courts    i 
to-day  fix  "  fair  rents."     Fairness  has  reference  to  needs,  to 
customs   and    traditions,  and   to  all  the  thousand  and  one  j 
circumstances  of  lime  and  place.     It  is  based  on  the  m 
"  hve  and  let  live."     Equality  of  sacrifice  has  reference  td  J 


A   RATIONAL   SySTEXf   OF  TAXATION. 

kgilimale  needs  of  various  members  and  classes  of  society, 
and  all  that  can  be  asked  of  practical  legislators  is,  that  they 
should  use  such  moral  and  intellectual  perceptions  as  they 
have. 

A  second  established  canon  of  taxation  is,  that  taxation 
should  be  certain  in  its  amount,  in  the  time  of  payment,  and 
in  the  manner  of  payment.  Any  uncertainty  in  these  par- 
ticulars aggravates  the  inevitable  evils  of  taxation,  and  offers 
opportunity  for  oppression  and  favoritism  on  the  one  hand, 
for  corruption  on  the  other.  Nothing  should  without  good 
reason  be  left  to  the  discretion  of  the  tax-assessors  or  tax- 
gatherers,  as  the  temptation  to  misuse  of  power  is  exces- 


A  third  canon  of  taxation  prescribes  the  convenience  of 
he  lax-payers  as  a  matter  of  cardinal  importance.  The 
burdens  of  taxation  are  thus  really  lightened.  One  of  the 
strongest  of  all  practical  arguments  in  favor  of  indirect 
taxation  is,  that  the  tax-payer  is  enabled  to  pay  his  taxes  in 
small  sums  from  time  to  time  in  his  purchase  of  commodi- 
ties at  his  convenience.  Direct  taxation  is  so  far  preferable 
to  indirect  taxation  when  considered  from  the  standpoint  of 
justice  and  the  public  weal,  that  it  should,  so  far  as  public 
opinion  and  public  morality  will  warrant,  be  substituted  for 
Direct  taxation  should  therefore  be  so  contrived  as  to 
incorporate,  as  far  as  practicable,  the  peculiar  advantages  of 


'Ttuil  the  Keniucky  sx^tdi  ^^t*  the  sherilb  of  the  coontin  with 
■Imoat  onlimUed  power,  is  une  □(  ill  defecu.  II  allawt  ihcrilk  to  uM 
their  diicretion  in  returning  penoru  as  delinqaent  in  the  mailer  of  the 
poll  t«i,  the  chief  source  of  county  revenue,  and  abo  gives  them  author- 
ity lo  dell)'  the  cullection  of  taxes,  if  they  think  there  is  reason  therefor. 
1  dealing  gently  with  political  friends,  and  severely  u-jlh  op|ioiienls, 
and  by  other  device*,  an  unscrupulous  iheriff  of  a  Kenluclsy  county 
could  become  almost  a  dictator  in  hii  own  county. 


J 


TAXATION  AS  IT  SHOULD    BE. 


indirect  taxation.  Sufficient  attention  has  never  been  given  I 
to  this  topic.  Taxes  on  landlords  should  be  collected  at  a  I 
time  when  they  usually  receive  their  rents,  if  there  is  any  I 
local  custom  in  this  respect.  Taxes  on  farmers  or  planters  I 
ought  to  be  made  payable  when  they  are  accustomed  to 
receive  their  annual  cash  returns  on  their  produce.  People 
whose  income  comes  in  gradually  by  the  week  or  monA 
will  lind  it  much  easier  to  meet  their  obligations  to  the  J 
public  treasury,  if  allowed  to  pay  their  taxes  in  quarterly  I 
instalments. 

The  last  of  the  classical  four  canons  of  taxation  concerns  1 
the  economy  of  administration,  and  prescribes  that   I 
sliould  take  out  and  keep  out  of  the  pockets  of  the  people 
as  little  as  possible  over  and  above  what  goes  into  the 
public  treasury.     Simple  as  are  these  four  canons  of  taxa- 
tion, they  have  always  been  violated  in  the  past  in  one  ot 
more  particulars,  and  the  violation  has  involved  an  injury  to  J 
the  public  weal  not  easily  calculable. 

As  another  fundamental  principle  I  would  lay  down  thi^ 
that  as  few  things  as  possible  should  be  taxed,  and  that  in 
the  selection  of  objects  for  taxation  great  care  should  be 
taken  to  reduce  interference  with  business  and  professional 
pursuits  to  a  minimum.     It  is  because  they  interfere  with 
business,  injure  the  small  man   in  making  a  greater  capital  \ 
necessary  to  engage  iu  business,  and  in  raising  profits  on  \ 
business  conducted  on  a  vast  scale  at  the  expense  of  more 
modest  establishments,  that  indirect  taxes  foster  monopolies    i 
and  are  so  injurious  to  the  masses.     It  was  by  their  means 
that  the  monopoly  in  the  manufacture  of  matches  was  built  j 
up  in  the  United  States,  and  that  the  great  bulk  of  the  busi- 
ness of  manufacturing  tobacco  for  consumption  was  concen- 
trated in  a  few  hands.     It  is  further  due  to  indirect  taxe«  \ 
that    it    is  difficult    lo   import   coiumodiiies    from    abroad,  \ 


fa 

I 

e 

1 


^   RATIONAL   SYSTEM  OF  TAXATTO.V. 


243 


except  in  large  quantities,  and  that  this  sort  of  business  is 
also  concentrated  so  much  as  it  is. 

To  tax  as  few  things  as  possible  must  not  be  understood  to 
mean  that  a  single  tax  like  one  on  incomes  or  on  land-values 
is  desirable.  Another  principle  of  taxation  is  that  every  one 
not  a  pauper  should  in  some  way  contribute  to  the  expenses 
of  government.  This  may  be  called  the  universality  of  lax- 
\Vhen  it  is  said  as  few  things  as  possible  should  be 
taxed,  it  means  that  when  there  is  an  opportunity  to  exempt 
any  commodity  or  any  species  of  property  from  taxation 
without  violating  any  other  principle  of  taxation,  it  is  a  great 
o  do  so.  It  has  been  found,  for  example,  that  apart  from 
any  considerations  respecting  the  desirability  of  protectionism, 
revenues  from  imported  commodities  can  as  well  and  as 
fairly  be  raised  on  a  dozen  articles  as  on  a  hundred  dozen. 
This  simplifies  administration  wonderfully,  and  reduces  the 
interference  of  government  in  private  affairs  in  a  most  de- 
sirable manner. 

The  effects  of  taxation  on  industry  must  be  carefully 
considered,  for  current  industry  is  the  source  of  taxes.  If 
current  industry  is  injured  materially  by  taxation,  the  impov- 
erishment of  the  people  will  be  the  result.  Suppose  all  taxes 
Bhould  be  removed  from  land  and  placed  on  improvements. 
It  would  enable  people  to  hold  land  indefinitely  for  specula- 
tive purposes  and  would  retard  improvements.  Suppose, 
now,  alt  taxes  removed  from  improvemenls,  and  placed  on 
unimproved  land.  It  would  certainly  stimulate  industry, 
even  if  it  is  not  desirable  to  adopt  this  measure  on  other  ac- 
counts. 

The  movements  of  property  and  the  principles  underlying 
them  must  be  understood  by  the  tax  legislator.  This  i: 
closely  connected  with  what  precedes.  A  street-car  pro 
jector  visited  a  neighboring  city  of  some  eighty  thousand 


244  TAXATION  AS   IT  SHOULD   BE. 

inhabitants,  obtained  a  street- car  franchise  which  has 
proved  a  bonanza,  and  when  the  municipal  council  pro- 
posed certain  conditions  of  the  grant,  he  feigned  anger,  and 
said,  "  We  will  go  elsewhere  and  invest  our  money,  if  wc 
are  hampered  by  such  conditions."  Of  course  he  lied  ;  but 
the  council  understood  so  little  about  the  nature  of  tlie  busi- 
ness committed  to  them  that  they  were  bulldozed  —  to 
use  a  Southern  phrase  for  this  Southern  council.  They 
should  have  known  that  there  are  few  valuable  street-car 
franchises,  that  one  is  valuable  only  in  a  city,  that  these 
firanchises  are  eagerly  sought,  and  that  if  duly  advertised, 
they  can  be  sold  for  a  handsome  percentage  of  gross  reve- 
nues, to  the  relief  of  tax-payers.  Last  winter  the  railroads  of 
Maryland  actually  resisted  the  proposals  of  the  Tax  Com- 
mission to  compel  them  to  pay  as  large  an  amount  of  taxes 
in  proportion  to  their  property  as  private  individuals,  on  the 
ground  that  they  would  thereby  be  driven  from  the  state  I 
Their  capital  is  fixed  and  specialized,  and  if  it  should  be 
taxed  so  that  it  would  yield  only  two  per  cent.,  that  would 
still  be  better  than  nothing.  Railroads  may  try  to  frighten 
a  community,  but  they  cannot  run  away.  Of  course  this  is 
no  reason  why  they  should  pay  more  taxes  than  justice 
requires ;  it  is  a  n-ason  why  the  Maryland  legislature  should 
not  have  allowed  itself  to  be  bulldozed. 

One  tax  ought  not  to  be  considered  by  itself,  but  all  the 
taxes,  our  federal,  state,  county,  and  local  taxes,  must  be  con- 
sidered as  forming  one  system  of  taxation,  and  the  aim  of  the 
legislature  should  be  so  to  adjust  the  burdens  of  taxation  that 
each  one  may  pay  a  fair  share  of  all  the  taxes  to  which 
is  liable.  Federal  taxes,  for  example,  bear  wi; 
ity  on  the  poorer  and  middle  classes,  and  as  we  are  Ameri- 
can citizens  as  well  as  citizens  of  our  various  common- 
wealths, and  as  states  are  not  independent  in  matters 


he     H 

^meri-  ^^1 
nmon-  ^^| 
ers  of  ^H 


d   RATIONAL   SYSTEM  OF   TAXATION. 


245 


Uxation,  it  is  but  Tair  that  state  and  local  taxes  should  aim 
to  lighten  ihe  burdens  of  the  poorer  and  the  middle  classes 
somewhat,  as  compared  with  the  wealthier  classes.  This  is 
ample  justification  of  an  exemplion  of  $600  from  an  income 
tax,  or  an  exemption  of  a  certain  amount  of  personal  prop- 
erty, as  for  example  the  exemption  of  $1000  worth  of  per- 
sonal property,  as  in  the  new  Tennessee  tax  laws,  dated 
March  36.  1887. 

It  is  not  extremely  difficult  to  frame  a  system  of  taxation 
for  American  stales  and  their  cities,  and  the  other  political 
units  into  which  they  are  subdivided,  if  Ihe  various  princi- 
ples which  have  been  elaborated  be  k.ept  in  mind. 


1 


CHAPTER  II. 


TAXATION   OF   REAL   ESTATE. 


THE  basis  of  every  system  of  taxation  must  be  the  tax- 
ation of  rea!  estate,  and  that  for  several  obvious 
reasons  :  Fii^t,  in  all  ages  past,  real  estate  has  been  the 
chief  source  of  wealth,  and  great  fortunes  and  special  privi- 
leges have  been  derived  from  its  possession.  The  founda- 
tion of  an  aristocratic  class  has  ever  been  large  landed  pos- 
sessions. Land  and  its  improvements  have  then  been  the 
chief  part  of  all  historical  systems  of  taxation,  because,  until 
a  comparatively  recent  period,  there   has   been  little  eke 


I'he  taxation  of  land  has,  then,  become  part  and  parcel  of 
the  legal  and  economic  traditions  of  all  modem  nations,  and 
we  have  adjusted  ourselves  to  this  fact. 

It  has  been  said  by  a  French  writer,  with  whom  the 
founders  of  this  republic  were  not  entirely  imfamiliar — 
Canard,  I  mean  —  that  "  every  old  tax  is  a  good  tax,  and 
every  new  tax  is  a  bad  one."  The  kernel  of  truth  in  this 
highly  exaggerated  principle  will  be  found  specially  appli- 
cable to  the  taxation  of  land. 

When  the  tax  on  the  value  of  land  is  liable  to  compaia- 

1  "  During  the  grcalet  part  of  Ihe  world's  history  the  rent  of  Und 
has  been  Ihe  chief  source  of  saving.  A  good  deal  is  saved  from  fent 
in  England  now.  and  in  Ihe  rest  of  Ihe  world  prnlialily  more  is  saved 
from  it  than  from  pfofili  on  capilal."  —  MarihalPi  EeimeiHia  of  In- 
Juslry.  page  39. 


TAXATION   OF  REAL   ESTATE. 


247 


tively  slight  variation,  and  is  something  which  can  be  cal- 
culated upon  as  a  fixed  and  unalterable  fact,  it  partakes  of 
the  Dature*of  a.  charge  upon  the  land,  and  to  this  extent  it 
m^  be  sail)  to  amount  simply  to  partial  public  ownership. 
A  fanner  owns,  let  us  say,  one  hundred  acres  of  ground  pur- 
chased for  J  10,000,  but  a  mortgage  for  $5000  rests  on  it 
because  he  was  able  to  pay  only  one-half  of  the  purchase- 
money.  He  feels  the  burden  of  taxation  and  groans  under 
it,  yet  he  should  reflecl  that  he  would  be  no  belter  off  if 
his  land  had  never  l>een  taxed,  for  in  that  case  he  would 
have  been  obliged  lo  pay  so  much  more  for  it,  and  instead 
of  being  Ijooo  in  debt,  he  would  owe  perhaps  ^7000.  I 
recendy  purchased  a  house,  and  in  deciding  how  much  I 
was  willing  to  pay,  1  took  into  consideration  the  taxes.  If 
the  house  had  been  exempt  from  taxation,  I  would  have 
been  asked  more  for  It,  and  would  have  been  wilting  to  give 
proportionately  more.  How,  then,  can  I  say  that  I  am 
really  bearing  any  burden  at  all  ?  I  simply  pay  the  public 
annually  for  its  claim  on  my  property,  and  if  this  claim 
should  be  released,  it  would  be  equivalent  to  a  present  to 
me.  0(  course,  if  the  rate  of  taxation  is  raised,  it  amounts 
lo  this,  that  the  claim  on  my  property  is  raised  and  the 
value  of  the  part  owned  by  the  public  increases.  The  more 
invariable  and  permanent  taxes  are,  the  larger  the  extent  to 
which  the  above  principle  can  be  applied,' 

Other  forma  of  wealth,  which  we  call  personal,  have  in- 
creased very  rapidly  during  the  past  fifty  years,  but  real 
estate  constitutes  so  considerable  a  portion  of  all  property 
that  it  is  out  of  question  to  think  of  framing  a  tax  system 
without  making  the  land  tax  the  basis  of  it  all.  The  fanner 
must  remember  that  his  real  estate  alone  is  not  involved, 

1  Tfaii  it  applicable  10  the  land  itseir,  but  only  to  » leu  extent  to  the 
impiDvemeiili  on  tbe  land. 


248 


TAXATION  AS  IT  SHOULD  i 


but  also  city  real  estate,  which  is  increasing  in  value  with 
such  enormous  rapidity,  and  making  so  many  rich  without 
labor. 

Apart  from  this,  land  is  visible,  easily  valued,  and  perma- 
nent in  its  location,  and  these  qualities  render  it  specially 
suitable  for  taxation.  The  following  reasons  have  also  been 
given  for  a  lax  on  real  estate,  more  particularly  on  land: 
Land  derives  an  increased  value  from  public  security  and 
from  public  works,  and  taxes  are  expended  chiefly  for  these 
two  purposes.  This  is  so  true  with  reference  to  public 
improvements  that  many  of  our  growing  cities  have  become 
embarrassed  by  expenditures  made  at  the  solicitation  of  land- 
owners, particularly  on  occasion  of  "booms,"  and  not,  as 
popularly  imagined,  by  the  moneyless  rabble.  An  instance 
recently  occurred  in  Buffalo,  where  large  expenditures  were 
forced  upon  the  people  by  real  estate  owners,  and  against 
the  protest  of  at  least  some  of  the  workingmen.  A  second 
reason  is  that  the  tax  may  be  considered  as  a  return  to  the 
community  for  the  rights  which  it  has  surrendered  in  what 
was  once  common  property. 

All  assessors  should  be  by  law  especially  directed  to 
assess  to  the  last  dollar  of  its  true  value  all  real  estate  held 
for  speculative  purposes.  There  is  a  common  and  iniquitous 
practice,  which  I  observed  everywhere  in  my  investigations, 
of  undervaluing  land  held  fur  a  rise,  and  not  used  at  all,  or 
used  only  for  some  unnatural  purpose,  as  when  city  lots  are 
utilized  as  cow-pastures.  Such  land  is  occasionally  actually 
valued  as  farm  land.  Thus  men,  without  a  stroke  of  work, 
and  even  while  obstructing  the  natural  growth  of  cities,  see 
their  property  steadily  increase  in  value,  and  this  is  solely 
due  to  the  industry  and  thrift  of  their  fellows.  An  aggra- 
vated case  of  this  sort  was  reported  to  me  as  existing  in 
Cleveland,  and  I  was  told  that  the  assessed  value  of  land  was 


TAXATION  OF  REAL   ESTATE.  249 

increased  in  Savannah,  Georgia,  the  moment  it  was  improved. 
Much  of  the  property  in  that  city  appears  to  be  assessed  at 
sixty  per  cent,  of  its  actual  selling  value,  but  unimproved 
property  is  assessed  for  a  smaller  relative  amount,  and  thus 
a  premium  put  on  speculation.  One  gentleman  told  me 
that  four  lots  which  had  recently  been  sold  for  $^2(. 
assessed  for  only  Siioo,  and  that  a  lot  next  to  one  he  had 
improved  was  assessed  for  only  ^1300,  whereas  it  could  not 
be  bought  for  less  than  $3500.  This  gentleman  had  bought 
a  lot  for  $900  of  the  city.  Its  valuation  for  taxation  was 
shortly  increased  to  ^1500,  and  as  soon  as  he  put  up  a 
house  on  it,  the  valuation  of  the  lot  was  raised  to  (1900. 
Such  practices  appear  to  discourage  improvements,  and  in- 
stances are  reported  where  farmers  would  improve  farms 
and  houses  were  it  not  that  they  fear  an  increased  s 
ment.  Taxation  should  be  so  administered  as  not  to  appear 
to  be  a  penalty  for  improvements  and  a  discouragement  to 
the  enterprising.  To  exempt  improvements  from  taxation 
for  a  period  of  three  years  is  not  without  precedent,  and  a 
exemption  for  a  period  of  two  or  three  years,  say  until  the 
third  tax  levy  from  the  beginning  of  the  improvement,  is  a 
measure  to  be  decidedly  recommended.' 

'  A  bill  passed  the  recent  legislature  of  Maryland  for  the  exten- 
sion of  the  boundaries  of  Ihe  cily  of  Baliimore  for  Iwo  miles  north, 
east,  and  west.  The  bill  provides  that  Ihe  present  low  assess- 
ments of  the  "Belt"  — the  part  it  is  proposed  to  inclnde  within 
ihc  city — shall  not  be  increased  until  Ihe  year  19001  also  that  the 
present  tax  rale,  leas  than  one-half  that  of  Ihe  city,  shall  not  be  raised 
until  that  lime.  This  provision  seems  to  be  unfair  to  the  other 
tax-payers.  It  will  give  landowriers  great  opportunities.  It  may 
be  said  in  its  justification  that  it  was  necessary,  in  order  10  induce 
Ihc  people  in  the  "  Belt  "  to  vote  (or  anne»ation.  A  worse  provision 
in  the  interest  of  the  holders  of  large  tracts  of  land  is  that  even  aClcr 
igoo  Ihe  present  rate  of  taxation  "shall  not  be  increased  for  citj 


1 


250 


TAXAT/O.V  AS  IT  SHOULD   i 


piuposci  on  any  landed  properly  wtlhin  the  uu<]  lerritory  until  avenuet, 
gtieets,  or  alleys  shall  have  been  opened  And  constructed  through  the 
Ume,  nor  until  there  shall  be  upon  evert  block  of  ground  so  to  be 
formed,  at  least  six  buildings  or  storehouses  ready  for  occupation." 
This  gives  owners  of  large  eitntes  opportunities  to  vrithhold  the  same 
from  the  market  for  speculative  purposes  as  long  as  Ihey  please,  and  lo 
grow  wealthy  without  exeition.  The  practical  man  will  say  that  city 
eitension  is  important,  and  that  Ibis  concession  helps  to  secure  it. 
Nevertheless,  no  permanent  eiemplion  from  public  burdens  ever  yet 
failed  to  produce  harm,  and  it  will  not  probably  be  different  in  this  case. 
It  would  not  have  been  so  bad  had  any  limit  whatever,  as  1910  or  igio, 

(0  be  understood  as  an  argument  against  annexation,  because  annexa- 
tion from  every  standpoint  ia  the  lesser  of  the  two  evils,  and  in  ttutnjr 
Ktpccts  the  plan  of  annexation  k  worthy  only  of  commendalioii. 


CHAPTER  in. 

EXEMPTION    OF     REAL     ESTATE    FROM    STATE 
TAXATION. 


ADMINISTBATTVE   REASONS   FOR  THIS   EXEMPTION. 

THE  second  feature  of  my  scheme  of  taxation  is  the 
exemption  of  real  estate  from  all  state  taxes,  and  for  t 
this  eKCmption  there  are  several  cogent  reasons,  all  liased  on 
actual  experience  of   states  and  counties  situated    in  this 
respect  much  as  Maryland  is. 

We  have  in  the  first  place  to  observe  the  difficulties  which 
everywhere  attend  the  assessment  of  real  estate  for  state  pur- 
poses.    It  cannot  be  assessed  by  a  single  board  of  assessors,      ■ 
for  the  area  is  too  vast.     Its  assessment  must  be  committed    ■ 
to  local  authorities,  and  sooner  or  later  a  rivalry  breaks  out    H 
between  them  in  the  undervaluation  of  real  property,  each  lo-      ' 
cality  striving  to  reduce  its  share  of  slate  taxes  at  the  expense 
of  other  parts  of  the  state.     This  struggle  results  in  inequality 
and  injustice,  for  real  estate   will  be  assessed   twice,  three 
times,  or  even  four  times  as  high  in  one  part  of  the  state  as 
in  another.     Reference   has  been  made  to  this  matter  in 
Ohio,  and  I  know  of  no  state  in  the  Union  where  such  ine-    , 
qualities  do  not  exist.     If  the  opinion  of  the  other  members 
of  the  Maryland  Tax  Commission  —  and  they  are  better  qual- 
ified to  form  one  than  I  — is  entirely  correct,  that  these  in- 
equalities as  between  the  various  counties  of  Maryland  are 
not  wilful,  the  fruit  of  design  and  cupidity,  the  fact  of  the 
inequalities  is  not  thereby  altered ;    and  there  is  no  reason    i 
to  suppose  that  we  in  Maryland  can  hope  to  escape  perma 


252  TAXATION  AS  IT  SHOULD  BE. 

nenily  the  experience  of  other  slates,  if  we  follow  the!' 
mechods. 

An  attempt  to  remedy  this  evil  has  frequently  been  made 
and  the  favorite  device  is  a  slate  board  of  equalization,  witJ, 
power  to  raise  or  lower  the  valualioii  of  any  county.  Per- 
haps the  best  constructed  board  of  equalization  is  found  in 
New  York,  where  three  of  its  members  are  traveling  state 
assessors,  who  endeavor  by  personal  inspection  to  arrive  at 
just  conclusions,  and  to  make  each  county  pay  its  propei 
share  of  taxes.  After  all,  at  its  best,  a  board  of  equalizatinn 
I  is  a  bungling  affair,  and  never  performs  its  work  satisfactorily, 
The  best  such  boards  can  ever  do  is  shrewd  guess-work,  as 
their  task  transcends  human  powers. 

As  a  matter  of  fact,  there  is,  however,  comparatively  little 
difficulty  in  the  valuation  of  the  various  pieces  of  real  prop- 
erty within  a  county,  and  there  is  no  reason  in  the  nature  o( 
things  why  all  should  not  be  assessed  and  taxed  at  an  ap-" 
proximately  uniform  valuation;  provided,  you  have  the 
proper  kind  of  administrative  machinery,  and  new  valua- 
tions at  least  as  often  as  once  in  three  years.  The  reason 
for  the  difference  between  county  and  state,  in  this  respect, 
is  obvious,  The  valuation  of  all  real  property  within  a 
county  may  be  placed  under  one  supervision,  and  by  fre- 
quent meetings  of  the  various  assessors  in  the  office  of  their 
chief,  and  comparison  of  methods  and  results,  with  the  right 
of  any  tax-payer  to  be  heard  before  the  board  of  assessors, 
and  with  the  right  of  appeal  in  certain  cases,  it  is  possible  to 
assess  each  one  at  about  the  same  rate,  so  that  if  one  piece 
of  property  is  assessed  at  fifty  per  cent,  of  its  true  value,  all 
other  property  within  the  county  may  likewise  be  assessed  at 
fitly  per  cent,  of  its  true  value.  The  only  proper  method  is 
manifestly  to  assess  property  at  its  true  selling  value  in  open 
market,  but  not  at  forced  sale ;  but  if  one  piece  of  property  is 


EXEMPTIOH  OF  REAL   ESTATE.  253 

assessed  below  its  trae  value,  all  other  property  ought  to  be 
assessed  below  its  true  value  in  the  same  proportion,  and  so 
long  as  there  is  no  state  tax  on  realty,  it  makes  comparatively 
little  difference.  If  the  assessed  valuation  is  low,  the  rate 
roust  be  correspondingly  higher.  On  the  other  hand,  if 
valuation  is  raised,  the  rate  may  be  lowered,  as  actually  hap- 
pened in  Baltimore  in  1S36,  when  the  assessed  valuation  of 
all  property  was  raised  from  S3, 787, 762  to  £43,931,960,  and 
the  rate  was  lowered  from  S4.77  J  per  f  100  to  $o,66J. 

All  the  immense  and  increasing  difficulty  which  boards  of 
equalization   encounter  is  obviated  by  dropping  the  tax  on  1  ( 
real  property  for  state  puqjoses,  and  the  burdens  resting  O" 
realty  are  thereby  lightened,' 


A  FORTHER    REASON    FOR   SEPARATING   THE  SOURCES  OF    STATE 
REVENUE   FROM  THE  SOURCES  OF  LOCAL  REVENUE. 

Another  reason  why  it  is  well  to  separate  the  source  of 
state  revenue  from  the  source  of  local  revenue  and  reserve 
real  estate  for  local  purposes,  is  that  the  expenses  of  the 
local  political  units  are  increasJne  more  rapidly  than  the 
expenses    of    central    state    governments.     We    hear   much 

'  The  »boTe  was  wriUen  before  I  «aw  Ihe  ■'  Reporl  of  Ihe  IllinoU  Kcv- 
nmisNon,"  tnade  in  1S86.  The  commission,  in  ipeakiiig  of 
nndervalualions  and  consequent  incijunlilics,  isys.-  "It  did  not  seem 
puuttile  Id  suggesl  any  lemedy  for  this  system  of  uodervalaaljiini,  tinlcss 
tome  method  of  divorcing  Ihe  cullection  of  the  stale  and  local  revenues 
could  be  devised.  Without  such  a  divorcement,  no  provUiim  of  the 
l»w,  however  stringent,  and  no  penalties,  which  would  lie  possible  'H 
desirable  as  sanctions  of  the  law,  would  produce  ihe  desired  result. 
Hence,  this  leparaliun  aX  the  alRte  and  local  tues  bccitne  a  fundamen- 
tal proposition  with  Ihe  commissiun,  and  the  revenue  system  herewilh 
iubmitlcd  for  consideration  is  constructed  on  that  theory."  The  lom- 
nuuion  abandons  the  equalization  of  real  properly,  and  recommends, 
M  I  have  done,  Ihe  taxation  of  lenl  estate  for  local  purposes  eictnsiveljr. 


254 


TAXATION  AS   IT  SHOULD  i 


about  centralizalion  in  these  days,  and  when  a  few,  often 
fronn  unprincipled  niotives,  start  a  cry  of  alarm  like  this, 
the  mass  of  men  join  in  it  thoughtlessly,  just  as  all  the 
sheep  of  a  flock  jump  over  an  imaginary  obstruction  be- 
cause the  bell-wether  has  been  foolish  enough  to  set  the 
example. 

The  truth  is,  the  functions  of  the   local  subdivisions  of 

I  the  Slates  have  for  yeais  increased  more  rapidly  than  those 
of  the  states,  and  this  has  naturally  been  accomplished  by 
more  rapid  increase  of  local  than  sLite  expenses.  Paving 
and  lighting  of  streets  must  be  done  better  than  formerly, 
charities  are  expanded,  measures  for  the  prevention  of 
disease  by  boards  of  health  with  large  powers,  and  other 
sanitary  municipal  provisions,  are  in  their  present  magni- 
tude comparatively  new ;  public  parks  and  other  arrange- 
ments for  recreation  and  beaut  ill  cation  entail  enormous 
expenditures,  and  the  origin  of  our  expensive  free  public 
school  systems  is  within  the  memory  of  the  living.  Citi- 
zens do  many  things  through  the  agency  of  municipal  co- 
operation which  they  did  formerly  individually — each  man 
for  himself.  The  old  German  maxim  was  "  Jcderman 
fege  vor  seiner  ThQr" — "each  one  sweep  before  his  own 
door."  This  antiquated  and  wasteful  method  of  street  clean- 
ing has  been  nearly  everywhere  abandoned,  and  streets  are 
cleaned  by  cities.  The  uld  custom  is  retained  in  Baltimore. 
Every  one  sweeps  street  ami  sidewalk  in  Baltimore  to  the 
middle  of  the  street,  and  also  waters  the  street  in  front  of  his 
own  house.  This  often  necessitates  an  extra  servant,  and  re- 
quires probably  twenty  times  the  labor  of  modem  methods. 
Sweeping  snow  from  sidewalks  is  another  esample.  This 
movement  is  not  something  merely  national,  but  it  is  world- 
wide and  inevitable.  There  is  every  reason  for  the  carefiil 
observer  of  the  drift  of  things  to  expect  a  continuance  of' 


EXEMPTION   OF  REAL   ESTATE. 


2SS 


this  movement,'  To  take  a  single  item :  public  school  ex- 
petuiitures  are  likely  to  increase  enormously  and  ought  to 
increase  enormously.  Changes  in  indastry  have  rendered 
the  old-fashioned  apprenticeship  system  antiquated,  an  insti- 
tution burdensome  alike  to  emoloyer  and  employ^,  and  as 
things  actually  are,  of  comparatively  little  use.  More  and 
more  must  the  masses  look  to  the  school  for  preparation  for 
actual  life,  and  it  is  lo  be  hoped  that  nuny  of  us  will  live  to 
see  the  time  when  industrial  training  wjU  Ite  introduced  in 
all  our  schools,  and  rendered  compulsory,  so  that  every  boy 
and  every  giri  may  gain  a  knowledge  of  useful  arts.  This 
will  in  the  end  be  highly  remunerative,  for  the  true  wealth 
of  a  country  resides  in  lis  men  and  women.  Can  any  one 
doubt  that  the  immense  wealth  of  a  city  like  Boston  is 
devoid  of  connection  with  its  large  expenditures  for  pubhc 
schools?  When  our  people  understand  this  they  will  de- 
mand that  teachers'  present  pitiably  small  salaries  be  raised 
so  that  the  occupation  of  a  teacher  may  rank  with  any  pro- 
fession, and  that  school  facilities  be  extended.  It  is  safe  to 
say  that  we  in  Maryland  ought  to  spend  twice  what  we  do 
for  schools,  and  that  the  wealth,  and  consequently  the  tax- 
able basis  of  Maryland,  would  thereby  be  increased,  and 
render  the  expenditure  most  prolitable. 

It  is  probable  that  increase  in  expenditures  of  government 
gives  us  as  good  a  measure  of  increase  of  functions  as  any 
we  have.     Wars  have  produced   complications   in    federal 


1  Uninfurmed   personi  iilcnlirr  eileniiDn  of  government   funcnom 
and  ccntraliialitin.     While  Frusta  was  acquiring  ihc  privile  railriiads, 


Dew«p>per 


s  had  n 


nCraliialioti 


[oMy  . 

Prmsia,  The  Iriilh  ii,  one  uf  (he  mijat  imporlsnt  niove- 
hc  doroettic  policy  of  Prauia,  during  the  pasi  Rrtren 
Kcn  an  increasing  .decent nliulion  of  adrninitlralion.  and 
been  inlenupted  by  the  aciiuiiition  of  private  riilruadi- 


I 


25G 


TAXATION  AS  IT  SHOULD  BE. 


expenditures;  and  to  measure  the  increase  of  functions  it 
may  be  better  to  compare  expenditures  on  account  of  the 
entire  civil  establisliment  at  one  period  with  lliose  expendi- 
tures at  another  than  to  compare  all  the  federal  expenditures  ■ 
at  one  time  with  those  same  expenditures  at  another, 

A  few  statistics  will  bring  before  the  reader  vividly  the 
nature  of  this  world-wide  movement.  It  is  said  that  the 
best  governed  great  cily  in  the  world  is  Berlin,  and  it  is 
certain  that  even  the  breath  of  suspicion  has  never  touched 
the  integrity  of  its  administration.  Nevertheless,  while 
population  doubled  from  1861  to  1876,  expenditures  in- 
creased fourfold.  The  expenditures  of  Paris  increased  from 
7,500,000  francs  in  1799  to  153,663,340  francs  In  1883, 
and  the  per  capita  expenditure  over  six-fold.  While  the 
expanses  of  the  state  of  Baden  increased  about  41  per 
cent  from  i860  to  1871,  the  expenditures  of  the  local 
political  units,  called  Gfmeiniien,  increased  81  per  cent. 
In  Prussia,  while  the  slate  expenses  from  1849  to  1867 
increased  a  little  over  25  per  cent.,  the  expenses  of  the 
local  political  units  increased  over  130  per  cent.  These 
illustrations  might  be  extended  indefinitely,  but  it  is  need- 
less. In  the  United  States  there  is  some  evidence  that  both 
extremes  — the  local  political  units  and  the  federal  govem- 
raenl  —  arc  increasing  in  importance,  while  the  significance 
of  the  slates  is  dwindling.  In  New  York  state  between  186a 
and  1866  the  state  tax  increased  168  per  cent.,  the  county 
tax  208  per  cent.,  and  the  town  lax  350  per  cent. 

The  following  tables  present  a  few  facts  relative  to  the 
increase  of  federal,  state,  and  local  expenditures  in  the 
United  Stales.  It  has  been  impossible,  in  a  few  cases,  to 
discover  whether  the  same  items  of  expenditure  are  com- 
mon to  the  budgets  of  a  given  state  at  the  different  periods 
given,  but  care  has  been  taken  in  their  analysis,  and  it  is 


EXEMPrrON  OF  REAL    ESTATE. 


thought  that  the  results  axe  approximately  correct,  and  indi- 
I  a  rough  way  the  comparative  increase.  If  there  is 
error,  it  is  probably  in  the  exclusion  from  earlier  budgets  of 
what  is  included  in  the  later.  Those  states  only  are  cited 
for  which  returns  for  the  period  covered  could  be  had. 
The  years  1828,  1S44,  i860,  and  1887  have  been  selected 
for  the  reason  that  complete  returns  could  not  be  found  for 
other  years  at  equal  or  nearly  equal  intervals.' 

EXPENDmjRE. 


1 
I 


1 

ma. 

BSTABUSHKHNT. 

'oh^ibiTd^T 

mrgBMi"™  vm 

"""*  ""=«*'»■           ^_ 

1828 

#3.676.053 

Jl  3,296,041 

>I  6,394.842             ^1 

1844 

5,645.184 

20,650,108 

22,483.560       H 

laoo 

37.977.978 

60,056,754 

63,200,875      ^m 

18S7 

85,264.815 

320,190,603 

267,932. 'So       ^H 

STATE 

^PENDHURES.                                                ^H 

.™ 

.„■ 

■  M4 

tBOO 

-  I 

Connecticu 

(147.' 17 

J208,947 

'723.85  s 

il.511.697   ■ 

Georgia  . 

1S6.929 

267,764 

','79.100 

4453.293    ■ 

Mime    . 

U7.3SI 

363.058 

394.008 

1,245.0 '5     H 

MaiyUnd 

168.87? 

635.524 

1.306.643 

2,.25.1<0       ■ 

MoMachus. 

tts      . 

447.7^ 

461,097 

1.303.784 

9.3  ■7,009      ^1 

New  Han. 

jsbire. 

80,890 

■38,855 

184.445 

95i.7Sa      ■ 

IT               New  York 

1.988,804 

3,200,000 

14,148,667 

Penusylvar 

ia  .     . 

3.'o7.552 

3,882.398 

3.637,147 

7.202,Kos     H 

Vermonl 

51.682 

90.054 

230489 

380,646     H 

viie'"'' 

1.516,358 

4,2=2,531 

2,626,713     H 

■These 

statiilici  have  heen 

cumpiled  c 

ieflv  from  reoorls  of  the.    ^^1 

finance*  of 

ihe  stales,  efc,  giver 

in  the  Amer 

1 

Z58  TAXATION  AS  IT  SHOULD   BE. 

From  the  above  tables  it  will  be  seen  that  the  expendi- 
tures in  1887  were  larger  than  those  of  iSiS,  approximately 
as  follows :  — 


The  federal  ei 

pendilure  for  civil  ealahliahment  was 
less  inlccesl  on  the  debt  " 

»3 
16 

mes 

u  great 

"     tolal  Tecle 

al  expend ilixre 

r6 

" 

"      " 

The  expenJilu 

"  Georgia' 

"        deducli 
shout 

I  debt  payment 

=3 
8 

" 

.,      .. 

,. 

"  Maine                  t. 

'■  Maryland 

"   Massachuselts 

'■  New  York 
"  Pennsylvania 

9 

S 

8 

;; 

..      .. 

"  Vermont 

7 

H 

"  Virginia « 

" 

"      ■' 

The  total  expeniliture  of  the  above  states  in  1887  was 
about  ten  times  as  great  as  in  1828.  The  table  given  in- 
cludes, in  nearly  ail  cases,  expenditures  on  account  of  debts 
and  schools. 

The  ordinary  expenses  of  states,  exclusive  of  debts  and 
scliools,  did  not  increase,  on  the  whole,  to  any  considerable 
extent  during  the  period  between  1840  and  i860  ;  for  while 
the  expenditures  of  some  states  increased  to  nearly  double 
the  amount  in  1840,  those  of  others  were  diminished  in  like 
proportion.  These  are  the  only  yeare  for  whicli  the  figures 
are  accessible,  but  it  is  believed  that  even  up  to  the  present 
time  the  increase  ha^i  been  comparatively  small. 

The    following    table   gives   a   comparison    between   the 

'  The  eiceplional  increase  of  Georgia  is  due  to  n  large  debt  pny- 
ment  in  i836-8t.    The  amnunl  paid  was  abutil  ^3.000.000. 
•Compared  wiih  1844. 


EXEMPTION  OF  REAL   ESTATE. 

Kieral  expenditures  and  (he  expenditures  of  the  stales  1 
enumerated  in  Chapter  II.  of  Part  II.,  in  1796,  with  the  T 
ei[i>enditures  of  the  same  in  1887,  and  also  between  the  j 
federal  expenditures  and  those  of  all  the  states  in  the  same  ] 

lion  1B8I 

Federikl  CKpendilure 15,790,651  t267,c)3i,iSo 

Expenditure  for  civil  government  in 

Federal  e»pentiilure 5.790.651  167,932,180 

Expcndilure  uf  all  ihe  >ui«  ....      tfioofioo  101,534,533*  . 

The  total  expenditure  of  the  various  states  has  increased 
between  the  years  1878  and  1887,^15,460,129  (the  expend- 
iture in  1878  being  ?76,o74, 294;  in  1887,  $101,534,523),  or 
about  33  J  per  cent.,  while  during  the  same  period  the  federal 
expenditure  for  civil  establishment  has  increased  60  per  cent., 
the  total  federal  expenditure  less  the  interest  on  the  debt  60 
per  cent.,  and  the  total  federal  expenditure  13  per  cent.  In 
this  same  time  the  taxes  levied  have  grown  from  ^50,000,000 
10*65,000,000. 

Whiie  Ihe  state  taxes  in  Ohio  from  1826  to  1886  increased 
about  forty-six  times,  and  the  taxes  for  local  purposes  over 
a  hundred  times,  the  federal  receipts  increased  only  thirteen 
times. 

'  It  IB  Ihoughl  the  receipts  from  taxes  in  1S87  might  more  fairly  be 
compiced  iviih  expenditure  for  civil  govecniDeiil  in  1796,  as  expresaing 
mote  nearly  the  ordinary  expenses  of  guvernmenl,  for  the  reason  that 
expeodilures  on  account  of  debt  and  schi>ol»  were  largely  met  by  re- 
eeipls  from  funds,  and  hence  not  included  in  utJinary  ctpenses  of  civil 
guvemmenl.  This  is  also  Itue  at  present,  but  in  most  cases  the  total 
expenditures  for  all  purposes  only  have  been  found,  the  amount  ex- 
pended for  ordinary  purposes  not  being  given  separately.  The  tola] 
receipts  in  1887  from  taxation  in  the  fifteen  slates  referred 
about  Ijo.ooo.ooo ;  in  all  the  slates  alwul  (65,000,000. 


I 


J 


260  TAXATIO.V  AS  IT  SHOULD   BE. 

In  New  York  state,  between  the  years  iSa?  and  1887,  the 
local  taxes  increased  fourteen  times,  while  the  total  stale 
revenues  increajied  but  seven  times,  the  total  federal  reve- 
nues having  increased  about  fourteen  times.  Between  the 
years  1846  and  1887,  the  town  and  county  and  school  taxes 
increased  about  thirteen  times,  the  stale  taxes  fourteen  times, 
and  the  federal  about  twelve  times ;  between  1868  and  1887 
the  state  taxes  have  decreased  nearly  one-half,  the  town, 
county,  and  school  have  increased  about  one-half,  and  the 
federal  decreased  a  very  little. 

It  is  noteworthy  that  the  Maryland  legislature  of  1888 
reduced  the  rate  of  stale  taxation  one  cent  on  the  Ji.oo,  or 
from  18  J  cents  to  17  J,  while  the  ways  and  means  com- 
mittee of  the  Baltimore  city  council  has  reported  in  favor 
of  increasing  the  city  rate  of  taxation,  for  i388,  thirty  cents 
on  the  Si.oo,  or  from  J1.60  to  ^1.90.  The  only  purposes 
for  which  a  property  tax  in  Maryland  is  levied  are  schools 
and  debt  payment,  and  tlie  debt  is  gradually  disappearing. 

This  table  exhibits  the  proportion  of  the  aggregate 
amount  of  taxes  levied  by  state,  county,  or  school  dis- 
trict authority : '  — 


.^^^^.    ..™0K. 

s..™. 

eo™^. 

palT™. 

^^^^ 

^ 

Tbe  Umlcd  Sut«     . 

16.66 

23.85 

48.60 

1J49 

,0. 

New  England  States 
Middle  Stales  .     .     . 
Southern  Slatei    .     . 
Wclem  States     .     . 
Terrilorie*  .... 

11. Si 
36.61 
16.68 
3340 

4.99 
14.64 
35.58 
3g.ll 
65.29 

8a,68 
61.47 
14,92 
34.35 
5-33 

11.08 
1.S9 

19.86 
S.98 

100 

1  Taken  from  Tenth  Ceniiu  Report,  Volut 


EXEMPTION  OF  REAL   ESTATE. 


I 


The  older  and  more  highly  developed  parts  of  the  country 
dearly  exhibited  relatively  smallest  expenditures  for  slate 
puqjoses,  and  relatively  the  largest  for  local  purposes.' 
Without  going  into  the  matter  further,  it  must  he  sufficiently 
evident  that  a  rational  system  of  taxation,  framed  with  a  view 
to  future  developments,  will  be  chiefiy  solicitous  about  the 
wants  of  the  local  political  units,  and  1  therefore  recommend, 
in  consideration  of  these  facts  and  other  facts  already  men- 
tioned, that  real  estate  be  exempted  from  all  taxation  for 
state  purposes.  So  far  as  I  am  able  to  judge,  thi: 
mendation  harmonizes  with  the  conclusions  of  the  ablest 
students  of  finance,  and  is  in  keeping  with  a  tendency  al- 
ready evident  in  the  United  States. 

Delaware,  Pennsylvania,  and  Vermont  levy  no  state  tax  on 
real  estate,  while  Wisconsin,  and  other  states  following  her 
method  of  taxing  railroads,  either  exempt  real  estate  from 
taxation  for  state  purposes,  or  contemplate  such  action  in 
the  near  future. 

There  have  been  so  many  complicated  factors  at  work 
that  it  is  with  some  difficulty  that  the  meEming  of  American 
budgets  can  be  understood.  Our  civil  war  was  an 
dinary  occurrence,  and  we  may  hope  that  national  finances 
will  not  again  be  disturbed  by  any  similar  disaster. 
seems  to  me,  as  already  remarked,  that  the  expenses  of 
civil  establishment  are  the  truest  measure  of  increase 
of  functions  of  the  national  government.  The  w 
duced  considerable  disturbance  in  state  and  local  iii 
ing  also.  Formerly,  hastily  undertaken  works  of  internal 
improvement    produced    (inane ial    embarrassment,    usually 

'  or  cuuisc  Ihc  [liiTcrcnt  furms  ur  ]KiUtii:at  urgatiizitlion  are 
ceincd  with  Ihis.  The  Soulherii  cimnty  has  always  been  imporlanl 
it  has  not  contaiDEd  imporlanl  suIkI  I  visions.  As  ihc  Siiutb  dcve 
locil  govetameiit  rniut  becume  tuore  iiupTiuiit. 


1 


Z62  TAXATION  AS  IT  SHOULD   BE. 

temporary ;  but  some  of  the  stales  have  more  to  show  for 
their  undertakings  than  is  generally  supposed.  The  Eric 
Canal,  in  New  York  state,  hiis  paid  fur  itself  many  timei  over. 
The  rent  of  a  single  railroad  in  CJeorgia  defrays  a  considerable 
portion  of  the  sUle  e\t)eiises.  Other  facts  have  been  already 
mentioned,  and  still  others  will  be  found  in  Part  IV,  of  this 
work.  After  state  undertakings  had  generally  been  aban- 
doned, what  may  be  called  a  mixed  system,  a  combination 
of  public  and  private  undertakings,  was  taken  up.  I'his  com- 
bined some  of  the  worst  features  of  public  and  private  under- 
takings, and  skilfully  evaded  many  of  the  best  features  of  each 
kind  of  enterprise.  States  and  local  political  units,  as  well 
as  federal  government,  began  to  |>ay  for  railroads,  whieh 
were  then  given  as  a  present,  without  adequate  reserved 
rights  to  private  corporations.'  This  also  produced  disturb- 
ance, and  nearly  led  to  repudiation  in  Maryland.  'All  these 
facts  must  be  carefully  kept  in  mind  ;  but,  notwithstanding' 
the  confusion  they  protluce,  one  fact  stands  out  clear  and 
incontrovertible.  The  functions  and  expenditures  of  local 
government  have  increasetl  the  world  over,  more  rapidly  than 
those  of  central  governments,  more  rapidly  in  the  United 
States  than  either  state  or  federal  government.  It  seems 
probable  that  the  functions  of  the  federal  government  are 
increasing  more  rapidly  than  the  functions  of  states,  that 
states  are  becoming  relatively  insignilicant.  When  states 
are  fitst  organized,  their  expenses  are  apt  to  increase  rapidly 
for  a  time,  and  then  to  liecome  almost  stationary,  and  in 
i  they  have  really  decreased,     A  wiser  policy 


1  The  gifts  to  Ihe  tllliiuis  Cenlral  Railruad  mure  ihan  cavered  the 
entire  cipensc  of  its  cunsiruclion.     The  Uiiilcd  Slales  buill  Ihe  Pacific 
Railroads,  and  handed  them  uver  as  a  Tree  git),  to  men  who  hive  ac- 
qnlred  enomous  wealth  from  this  traunty.     See  James  on  "  Railw 
Quettion."    Economic  Au»ciatiiin  noiiogtaph.  Volume  II.,  No.  3. 


I 


EXEMPTION   OF  REAL   ESTATE.  Z63 

may  hereafter  restore  our  states  to  a  more  important  posi- 
tion in  American  life.  It  is  eminently  to  be  desired  from 
every  standpoint.'  The  states  have  surrendered  a  large 
portion  of  their  functions  to  private  corporations,  and  subject 
to  interference  in  domestic  concerns  by  federal  courts,  they 
sink  into  an  unworthy,  undignified  position,  offering  no  field 
for  honorable  public  service  on  the  part  of  patriots.  Private 
corporations  offer,  perhaps,  the  largest  inducement  to  talent, 
but  the  federal  service  is  not  entirely  without  attractions, 
while  it  now  does  not  seem  improbable  that  the  position  of 
mayor  of  a  great  city  will  soon  be  a  more  enviable  office 
than  that  of  governor  of  an  American  commonwealth. 

While  the  states  at  present  cannot  perform  a  great  deal 
for  society,  they  have  retained  vexatious,  and  in  many  cases 
most  injurious  rights  of  interference  in  local  affairs,  and 
local  government  can  jvith  us  in  America  do  very  little 
out  express  legislative  sanction.  We  talk  a  great  deal  aboul 
local  self-government,  but,  as  far  as  finance  is  concerned, 
the  thing  itself  scarcely  exists.  We  do  not  begin  to  have 
the  power  of  local  seR'-heip  which  the  well-governed  Ger- 
man cities  have.  One  reason  for  favoring  the  separatii 
sources  of  state  and  local  revenues  is  to  limit  the  interfer- 
ence of  legislatures  in  local  affairs,  so  fruitful  of  corruption, 
and  to  enlarge  the  province  and  to  increase  the  independ^ 
ence  of  local  self-government. 

'  One  of  the  measures  tecommendeil  by  Prof.  Henry  C.  Adams,  for 
thtl  purpose,  is  llie  rcsloraliun  of  the  burrowing  power*  of  the  stale* 
See  hii  "  Public  Debts,"  Put  III.,  ChaiHer  IV. 


CHAPTER   IV. 

A  PLAN  WHEREBY  A  PART  OF  THE  INCREASING 
VALUE  OF  REAL  ESTATE  IN  STATES  AND  CITIES 
MAY   BE   SECURED   BY   THE   PUBLIC. 


A  CUSTOM  which  obtains  in  Savannah  is  suggestive. 
It  appears  that  the  city  is  extended  only  after  all  or 
a.  considerable  portioD  of  the  land  in  the  proposed  new  pait 
has  been  acquired  by  the  city.  This  is  bought  by  the  acre, 
as  it  manifestly  cannot  be  sold  as  lots  until  it  has  been  laid 
out.  After  improvements  have  been  made,  the  land  is  sold 
in  lots  at  auction,  and  the  city  realizes  a  proht  on  the  trans- 
action, which  accrues  to  the  benefit  of  the  lax-payers.  Lots 
were  formerly  sold,  and  only  interest  on  the  amount  bid  was 
required  ;  in  other  words,  unalterable  but  redeemable  ground 
rents  for  the  city  were  established,  and  to-day  the  owners  of 
some  of  the  most  valuable  lots  in  the  city,  sold  long  ago, 
pay  $20  to  ^30  a  year  into  the  municipal  treasury.' 

There  are  some  evident  defects  in  the  plan.  Ground 
rents  for  twenty-five  years,  with  power  to  revise  them  at  the 
expiration  of  the  period,  or  to  put  these  lots  up  at  auction, 
the  purchaser  to  acquire  improvements  at  an  appraised  val- 
uation, would  have  saved  for  the  community  the  increment 
in  vaiue  due  to  the  diligence  and  thrift  of  the  community. 

1  Lois  belonging  lo  Ihe  city  on  North  Calvert  Street,  in  Baltimore, 
were  advertiied  for  sale  at  publii:  aucli'in  recently,  the  purcbaKr  (o 
make  semi-annual  payments  lo  Ihe  cily;  in  olher  words,  lo  pay  for  the 
nle  or  Ihe  land.  The  city  did  not  retain  the  right  lo  revise  Ihe  rent  a' 
the  ecpiration  uf  a  given  period. 


I 


^   PRACTICABLE   PI.A.V.  ! 

This  is  an  easy  and  practicable  plan,  and  in  many  cities,  il 
had  been  applied  at  a  sufficiently  early  date,  would  have  ' 
obviated  the  necessity  of  taxation,  and  thus  have  given  an 
immense  impetus  to  commerce  and  manufactures.  The 
diminution  in  the  number  of  the  idle  classes  would  be  a 
benefit,  and  the  fewer  opportunities  for  speculation  would 
turn  more  to  the  old-fashioned  methods  of  getting  a  living 
by  hard  work. 

The  details  of  the  plan  are  easily  understood,  and  it  is 
not  difficult  to  carry  it  out.  Toronto,  in  Canada,  owns  land 
on  which  improvements  have  been  constructed,  and  derives 
a  considerable  income  therefrom.  The  amount  received 
from  rentals  of  city  property  in  1885  amounted  to  $^6,- 
306.04. 

This  is  a  plan  which  Columbia  College  and  private  par- 
ties pursue,  although  with  some  deviation  in  detaib.  It  is 
customary  to  lease  city  lots  for  twenty-five  years,  more  or 
less,  at  the  expiration  of  which  period  the  owner  of  the  land 
fixes  a  new  rental.  The  owner  of  the  improvements  has 
then  an  option.  He  can  pay  the  rental  for  another  period, 
or  he  can  surrender  his  improvements  to  the  land-owner,  who 
must  then  purchase  them  at  an  appraised  valuation.  This 
is  rather  too  complicated  for  an  .\merican  city.  The  plan 
which  3  college  in  Chestertown,  Kent  County,  Maryland,  pur- 
sues is  open  to  no  objection.  Il  leases  land  to  parties,  and  at 
the  expiration  of  the  lease  puts  it  up  at  auction.  If  the  pre- 
vious lessee  bids  in  the  lease,  he,  of  course,  is  not  obliged  to 
pay  for  the  improvements.  If  some  one  else  offers  more 
for  the  use  of  the  property,  the  other  person  must  buy  the 
improvements  at  an  appraised  valuation.  If  this  plan  is 
pursued  by  stales  and  cities,  it  remains  for  two  private  par- 
ties to  settle  between  themselves  the  value  of  the  improve- 
ments, and  there  is  no  opportunity  for  fraud ;  nothing  could 


IL. 


266  TAXATION  AS  IT  SHOULD   BE. 

be  easier,  and  il  would  encourage  improvement  rather  than 
otherwise,  We  of  Bahimoro  have  a  private  ground  rent 
system,  which,  it  is  said,  has  done  more  than  anything  else 
to  encourage,  building  and  the  ownership  of  houses  even  by 
poor  people.  The  land  is  not  bought,  but  it  is  agreed  for 
all  time  to  pay  a  certain  definite  sum  for  its  use.  This 
raises  up  an  idle  class,  and  diverts  men  from  industry,  and. 
on  this  account  its  advantages  are  a  subject  of  controversy. 
The  objections  which  are  urged  against  it  would  nearly  all 
disappear,  did  the  beneiit  of  the  ground  rents  accrue  to  the 
dty.  It  is  easier  to  get  a  home,  because  one  is  not  obliged 
to  buy  the  ground,  and  the  ground  rent  is  unlike  a  mortgage 
because  the  owner  of  the  improvements  can  never  be  dis- 
turbed so  long  as  he  pays  bis  ground  rent. 

Il  is  to  be  recommended  that  states  and  cities  both  make 
use  of  this  suggestion.  It  is  to  be  recommended  that  legis- 
latures pass  laws,  or  that  constitutional  provision  be  made, 
to  the  effect  that  no  new  street  be  laid  out  by  any  munici- 
pality through  the  land  which  it  does  not  own  ;  this  land  to  , 
be  acquired  as  agricultural  land,  and  lo  be  leased,  as  demand 
might  arise,  at  auction,  in  periods  of  twenty-five  years,  lo  be 
released  at  the  expiration  of  the  period ;  the  lessee,  if  a  new  I 
person,  to  acquire  improvements  at  an  appraised  valuation. 

Agricultural  land  which  stales  like  Texas  and  Nebraska 
own  can  well  be  treated    similarly,  and  the  proceeds  de- 
voted to  educational    purposes  in  the  largest  sense  of  the  i 
term  education,  including  under  it  art,  literature,  manual  ] 
training,  physical  training,  etc.    Nebraska  leases  school  lands, 
but  sells  them  when  ihey  become  worth  $7.00  per  acre. 

The  plan  outlined  is  far  better,  and  with  no  expense  to  lait- 
payers  would  give  Western  states  the  finest  educational  61-  j 
cilides  the  world  has  ever  seen. 

Its  social  and  industrial  effects  would  also  lie  excellent   I 


A    PRACTICABLE   PLAN. 


There  must  always  be  tenant;  of  iand,  and  alien  landlordism 
is  assuming  alarming  proportions  in  our  Western  states. 
Land  which  the  state  owns  can  be  controlled  by  the  states, 
and  such  evils  as  those  which  now  excite  Illinois  can  be  ob- 
viated. Instead  of  annual  leases,  or  the  very  short  leases 
which  are  the  best  now  given,  the  tenant  could  be  given 
long  leases,  and  he  would  have  a  guarantee  of  payment  for 
his  improvements.  Experience  has  proved  thb  to  be  suf- 
ficient to  secure  good  cultivation.  Liiglish  farmers  nearly 
all  rent  their  land,  yet  no  better  agriculture  is  known.  The 
best  way  out  of  the  difficulties  of  absentee  landlordism  and 
rack-rents  in  Western  states  is  for  the  states  to  acquire  land 
held  by  foreigners,  and  to  rent  it  to  tenants.  Some  such 
plan  as  this  may  be  an  absolute  necessity  in  the  future, 
and  it  is  desirable  that  the  states  and  cities  sell  no  more 
lands.  It  might  also  be  urged  upon  Congress  to  sell  no 
federal  land.  The  possession  of  land  is  a  great  social  safety- 
valve,  and  it  is  madness  for  us  to  let  all  of  our  public 
domain  pass  into  private  possession. 

It  does  not  seem  to  me  desirable  that  states  and  cides 
should  own  all  the  land,  but  an  ownership  of  part  of  it  must 
be  beneficial. 

Massachusetts  has  redeemed  io8^^^  acres  of  land  once 
under  water,  now  in  the  Back  Bay  district  of  Boston,  Its 
profit  on  the  sale  of  this  land  was  over  four  millions 
of  dollars.  Had  it  been  leased,  as  I  have  suggested,  this 
very  valuable  land  might  ultimately  have  yielded  some  two 
millions  of  dollars  a  year  on  a  moderate  estimate,  or  one- 
third  more  than  the  direct  state  lax  for  1886.' 

1  PeoplE  were  fonDerl]'  ■ccustamed  to  sneer  st  the  redemplion  of  Ihe 
Back  Day  Iqnd  "a-j  the  state.  Now  thai  it  has  {iruved  a  succcuCul  en- 
terprise, we  hear  eompnralivcly  little  about  it.  Had  il  turned  out  a 
failare,  11  would  have  been  cited  a  Ihouiand  times  a  day  B9  >  proof  of 
the  incfhciency  of  public  worki. 


J 


71 


268 


TAXATION  AS  IT  SHOULD  BE. 


The  location  of  some  government  buildings  in  the  city  of 
Toronto,  Canada,  is  about  to  be  changed,  and  this  places 
the  public  in  possession  of  a  large  tract  of  land  in  the  city 
suitable  for  building  purposes.  It  is  to  be  hoped  that  some 
such  plan  as  this  recommended  will  be  adopted  in  the  dis- 
posal of  it.  If  the  renting  of  land  by  the  city  of  Toronto 
to  private  parties  in  any  way  retards  improvement,  as  some 
assert,  it  must  be  due  to  defects  in  the  laws,  which  can  readily 
be  altered.  Such  reports,  however,  are  to  be  received  with 
caution,  as  they  can  often  be  traced  to  the  interested  motives 
of  those  who  desire  to  acquire  public  property. 


CHAPTER  V. 

NATURAL    MONOPOLIES. 


NATURAL  MONOPOLIES  DEITPJED  AND   CHARACTERIZED, 

IT  is  a  great  problem  to  know  how  to  provide  for  growing 
municipal  expenditure  ;  yet  Nature  herself  seems  to  have 
made  provision  therefor  in  those  pursuits  which  may  be 
classed  as  natural  monopolies,  and  necessarily  use  local  pub- 
lic property.  A  natural  monopoly  is  a  business  which  is 
such  by  its  own  inherent  properties.  While  il  may  be  occa- 
sionally engaged  in  a  struggle  with  a  rival  to  determine  the 
terms  of  combination,  or  the  condition  of  a  truce,  as  in  a 
division  of  territory,  it  is  not  like  other  businesses  subject  to 
the  steady,  constant  pressure  of  competition.  The  principal 
natural  monopolies  with  which  stales,  municipalities,  and 
other  local  political  units  are  concerned,  are  streets,  bridges, 
railroads,  canals,  ferries,  gas-works,  electric- lighting  works, 
water-works,  harbors,  and  street-car  lines.  The  following 
characteristics  of  monopolies,  quoted  from  a  recent  writer 
on  this  topic,  will  help  to  show  why  they  must  be  monopo- 
lies :  — 

"  I.  What  they  supply  is  a  necessary. 

"  a.  They  occupy  peculiarly  favored  spots  or  lines  of 
land. 

"3.  The  article  or  convenience  they  supply  is  used  at  the 
place  where,  and  in  connection  with,  tlie  plant  or  machinery 
by  which  it  is  supplied. 

"  4.   This  article  or  convenience  can  in  general  be  largely. 


270  TAXATION  AS  IT  SHOULD   BE 

if  not  iodefinilely  increased,  without  proportionate  increase  | 
in  plant  and  capital. 

''5.  Certainty  and  harmonious  arrangement,  which  can 
only  be  obtained  by  unity,  are  paramount  considerations," 

The  reason  why  certain  pursuits  are  monopolies  may  be 
stated  in  other  words.  What  they  supply  can  be  supplied  by 
one  person  much  cheaper  than  by  two  or  three.  If  two  gas 
companies,  with  a  capital  of  ji,ooo,ooo  each,  operating  in  a 
single  city,  just  pay  expenses,  by  combination,  although  the 
capital  will  be  doubled,  the  reduction  in  expenses  will  be 
such  that  a  profit  will  resu'.t  therefrom  ;  added  to  this  is  the 
more  complete  control  of  price.  It  is,  therefore,  no  acci- 
dent that  we  have  never  secured  permanent  competition  in 
gas  supply  in  Baltimore,  with  all  our  attempts.  We  never 
can  secure  it,  should  we  try  a  thousand  times.  So  it  is  with 
all  natural  monopolies.  It  is  best,  therefore,  to  recognize 
this  fact,  and  act  upon  it. 

PKOFTIADLENESS  OF   NATURAL    MOMOPOIJES. 

It  is  further  to  l>e  remarked  that  when  natural  monopolies 
charge  for  services,  in  contradistinction  from  free  public 
monopolies,  like  streets,  and  are  guaranteed  a  free  field, 
their  ptofiLs  constantly  rise  with  the  growth  of  the  city.  The 
public  gas-works  of  Berlin,  in  Germany,  illustrate  this.  They 
supply  gas  for  less  than  one  dollar  a  thousand,  and  yet  have 
become  so  remunerative  that  the  profits  therefrom  defray 
eighteen  per  cent,  of  the  expenses  of  the  municipal  gov- 
emment.  American  cities  have  had  somewhat  similar  experi- 
ences. Richmond  and  Danville,  Virginia,  and  Wheeling, 
West  Virginia,  may  be  mentioned  as  examples.  In  Wheeling, 
gas  is  sold  for  ninety  cents  a  thousand,  and  the  city  derives  a 
profit  therefrom.  The  corruption  in  connection  with  the 
trust  io  Philadelphia,  which  has  become  so  notorious, 


degas-    ^H 
IS,  has   ^^H 


IIATURAL   MONOPOLIES.  271 

"ii^ewhat  obscured  the  real  nature  of  the  question.  Yet  it 
may  be  doubted  whether  private  corporations  in  other  cities, 
which  might  be  named,  have  had  a  less  corrupting  and  de- 
basing political  effect.'  At  any  rate,  the  people  of  Philadel- 
phia wisely  determined,  after  the  expiration  of  the  Inist,  to 
retain  public  ownership  of  gas-works,  and  it  is  said  that  the 
profits  on  them  during  the  past  year  exceeded  expectations 
by  $1,000,000.  The  receipts  from  the  works  figure  for 
nearly  ^3, 000,000  in  the  budget  of  1887.  I  have  several 
recommendations  to  make  in  view  of  these  facts. 


^B      loat 


RECOMMF.NOATLONS. 

I  recommend '  that  legislatures  hereafter  refiise  to  grant  a 
charter  to  any  private  corporation  to  supply  arty  municipal 
corporation  in  the  state  with  gas,  or  water,  or  electric  light, 
but  that  such  undertakings  shall  always  !«  public ;  further, 
that  municipalities  be  encouraged  to  purchase  existing  private 
gas-works  when  favorable  opportunity  to  do  so  occurs.  If, 
however,  charters  are  granted,  they  should  be  sold  at  auction 
for  a  limited  period,  with  reserved  right  as  hereinafter 
described. 

A  few  municipalities  manage  their  own  street-car  lines,  but 
the  time  is  hardly  ripe  for  that  with  us.  I  recommend  that 
legislatures  pass  a  law  somewhat  similar  to  that  of  New  York 
state,  but  modified  in  such  manner  as  to  secure  to  the  public 
to  a  larger  extent  the  benefits  of  future  increments  of  value. 

'  A  bill  regulating  the  price  of  gas  in  Baltimore  was.  in  April,  iSJJS, 
■lolen  from  the  Senate  file  of  bills  after  it  had  pasaed  the  House,  and 
when  it  wai  about  to  come  up  for  the  Ihird  leading.  Pulilic  gas-worki 
have  nevec  yet  employed  lobbyiMt  who  stole  bills  from  the  legislature. 
1  keep  the  language  of  my  report  to  the  Maryland  legislslure,  f<iT 
good  reasons,  although  it  is  not  in  cvciy  respect  the  language  suitable 


I 

J 


TAXATION  AS  IT  SHOULD   BE. 

I  recommend  that  all  street-car  franchises  be  sold  at  public 
auction,  to  be  dul)-  advertised  in  oewspapere  in  Baltimore, 
Philadelphia,  New  Vork,  and  Boston,  and  that  the  sale  be 
for  fifteen  years,  to  the  one  who  will  give  the  largest  percent- 
age of  gross  receipts  —  never  net  receipts,  for  in  such  c 
by  some  kind  of  hocus-pocus,  net  receipls  tend  \a  % 
tnum.  At  the  expiration  of  fifteen  years  the  right  should  be 
reserved  to  the  local  authority  "  to  purchase  the  undertaking 
compulsorily  on  the  terms  of  paying  to  the  company  the 
then  value  of  all  land,  buildings,  and  plant  belonging  to  the 
company,  at  their  market  value,  having  regard  to  their  condi- 
tion and  their  suitability  to  the  purpose  of  the  undertaking, 
but  without  any  addition  for  compulsory  purchase,  good 
will,  or  future  profits."  ' 

If  the  city  should  not  choose  to  exercise  this  right,  the 
sale  of  the  franchise  at  public  auction  under  similar  condi- 
tions should  then  be  rendered  compulsory,  the  purchaser, 
if  not  the  existing  company,  but  another,  to  purchase  all 
the  proi>erty  of  the  previous  company  at  an  appraised  val- 
uation, as  in  the  case  of  the  purchase  by  the  city,  and  under 
similar  conditions.  This  method  determines  the  actual 
value  of  the  franchise  which  ought  to  go  to  the  public,  to 
whom  alone  it  is  due,  and  still  leaves  profit  on  capital 
actually  invested  to  the  street-car  companies.  If  a  line  is 
worth  but  little,  it  will  bring  little ;  if  much,  it  will  bring 


A  somewhat  similar  plan  is  followed  in  New  Orleans  as 
well  as  in  New  York,  and  the  enormous  profits  on  street-car 
lines  can  be  seen  in  the  fact  that  franchises  have  been  sold 


'  This  quotation  contains  the  provision  of  ihe  English  Act,  and  ii 
qaoted  fioni  -'The  SUle  ii>  its  Relation  lo  Trade,"  by  T.  11.  Farrei, 
page  91. 


NATURAL  MONOPOLIES. 


273 


fa  New  York  for  thirty-five   and  forty  per  cent,  of  gross 
revenues.' 

The  charter  of  the  Bahimore  City  Railway  Company  ex- 
pires in  1889,  and  the  Act  of  Incorporation,  drawn  up  by  a 
far-seeing  man,  contemplated  the  enjoyment  of  future  un- 
earned increments  of  value  by  the  public.  The  tenns  of 
the  Act  of  Incorporation  contain  this  provision  : '  "  Provided, 
that  the  said  Mayor  and  City  Council  shall  have  the  priv- 
ilege, within  two  years  after  the  expiration  of  fifteen  years 
from  the  date  of  the  passage  of  said  ordinance,'  to  purchase 
and  buy  out  the  said  corporation,  and  all  its  property  and 
franchises,  whether  conceded  by  the  ordinance  aforesaid,  or 
granted  by  this  act,  for  and  at  a  fair  and  equitable  consider- 
ation, or  value ;  and  in  case  of  a  disagreement  as  to  the 
said  value  and  consideration,  the  Mayor  and  City  Council 
aforesaid  shall  appoint  one  referee,  and  the  corporation 
hereby  created  shall  appoint  another  referee,  who,  in  event 
of  disagreement,  shall  appoint  an  umpire,  the  decision  of 
whom  shall  be  Rnal,  as  to  the  price  to  be  paid  as  aforesaid  ; 
and  provided  fur/her,  that  if  the  said  Mayor  and  City 
Council  of  Baltimore  shall  decline  or  neglect  to  give  notice 
to  the  said  corporation  of  their  intention  to  make  said  pur-   j 


I  CoqioTalions  enileavor  ta  conceal  enannous  profits  bj  stock-wster- 
ing  and  the  cf  cation  of  morlgage-debti.  One  railroad  or  which  I  koow 
tomething — ^and  it  is  but  one  uf  many  —  has  issued  Iwnds  for  all  the 
capital  actually  invested,  and  because  it  pays  no  dividendi  on  stock, 
repteaenting  no  original  investment,  its  president  claims  that  it  is  mak- 
ing no  money.  The  claim  thul  a  corporation  is  making  no  monej 
should  not  be  granted  until  a  complete  exhibit  is  made  o: 
tually  invested,  amount  cf  l)onds  issued,  and  of  salaries 


'  See  Maryland  Code,  Supplement,  Volume  1.,  A.  A.  Il 
LXXI..  Feb.  13. 


»pit.l<u>     « 
id  interest    ^^| 

E,  Chaptd    ^H 


27t  TAXATION  AS  IT   SHOULD   BE. 

chase  within  the  aforesaid  two  years,  then  the  graots  and 
privileges  held  and  enjoyed  by  said  corporation  shall  con- 
tinue to  belong  to  it  for  fifteen  years  longer  from  the  expira- 
tion of  said  original  fifteen  years,  subject  to  all  the  terras 
uid  conditions  imposed  and  recognized  by  this  act,  and 
continuable  thereafter  in  like  manner,  from  time  to  time,  as 
aforesaid,  upon  the  said  terms  and  conditions." 

It  is  to  be  recommended  that  the  mayor  and  city  council 
make  use  of  this  provision  and  sell  ihc  franchise  for  fifteen 
years,  to  the  highest  bidder,  on  conditions  already  men- 
tioned. 

The  special  tax  was  originally  twenty  per  cent,  of  gross 
revenues,  and  it  has  been  gradually  reduced  by  unscrupulous 
legislators  to  nine  per  cent,  of  gross  revenues.  At  the 
same  time  stock  of  the  par  value  of  twenty-five  has  risen 
to  seventy-two  or  seventy-five,  and  pays  twelve  per  cent, 
dividends.  It  is  stated,  however,  that  over  eighteen  dol- 
lars 3  share  was  never  actually  paid  in,  which  would 
make  the  dividends  nearly  seventeen  per  cent.  While  every 
one  is  glad  thai  the  corporation  has  prospered,  there  is  no 
reason  why  the  use  of  the  public  streets  —  the  property  of 
the  public  —  should  longer  be  granted  without  adequate 
compensation. 

I  esdmate  that  the  franchise  at  public  auction,  duly  adver- 
tised, would  produce  at  least  twenty-five  per  cent,  of  gross 
revenues,  and  this  would  relieve  to  that  extent  the  business 
men  of  Baltimore  from  their  load  of  taxation. 

This  is  a  far  more  rational  and  a  far  juster  plan  than  the 
present  one,  which  imposes  the  same  tax  on  all  street  rail- 
way franchises,  whether  worth  much  or  little.  The  in- 
terests of  all  the  corporations  are  thus  united,  and  all  work 
together  for  tax  reduction,  and  it  is  in  this  very  way  that  the 
past  reductions  have  been  secured.    Each  franchise  should 


I 


NA  TURAL   MONOPOLIES. 

be  treated  separately  and  sold  for  what  it  is  worth,  and  theU' 
a  weak  line  will  see  no  reason  for  helping  a  powerful  one  to 
escape  its  proper  tajt. 

A  word  more  may  "be  said  about  the  plan  outlined  for 
the  treatment  of  natural  monopolies.  It  is  to  be  observed 
ihat  it  forces  no  particular  system  of  management  upon  any 
city.  It  leaves  the  people  free  from  time  to  time  to 
decide  what  it  is  best  to  do.  If  it  is  felt  that  it  is  best  to 
adopt  private  management,  this  course  is  open  to  the  city. 
If,  however,  it  is  thought  to  be  best  to  commit  any  or  all 
natural  monopolies  lo  public  management,  the  way  is  also 
clear  for  that  at  the  expiration  of  the  period. 

There  are  always  two  ways  for  the  management  of  natural 
monopolies.  One  is  the  French  method,  private  manage- 
ment under  public  control ;  the  other,  the  German,  and  to 
an  incre.ising  extent,  the  English,  namely,  the  direct  public 
management  of  natural  monopolies. 

Doctrinaires  object  to  public  management,  that  it  is 
inferior  to  private  management.  Experience,  however, 
shows  that  their  assertion  is  based  on  fancy,  not  fact.  Hun- 
dreds of  towns  and  cities  in  this  and  other  countries  have 
acquired  gas-works,  watet-works,  electric -lighting  works,  and 
it  yet  remains  to  show  one  single  instance  in  which  the 
acquisition  has  not  proved  advantageous. 

It  is  said  that  we  ought  to  wait  until  our  civil  service  is 
improved.  One  who  is  not  a  doctrinaire  feels  inclined  to 
ask,  however,  What  makes  the  civil  service  so  bad?  The 
moment  that  one  begins  to  examine  facts  it  becomes  appar- 
ent that  those  intrusted  with  the  management  of  natural 
monopolies  are  themselves  the  most  potent  cause  c 
niption.  Such  an  one,  on  going  to  the  City  Hall  in  Balti- 
more, will  find  that  the  heads  of  departments  carry  in  theii 


I 
I 


276 


TAXATION  AS  IT  SHOULD   HE. 


pockets  passes  on  the  street  railroads  of  the  city,'  and  if  this 
is  not  an  attempt  at  comiption,  what  is  it?  If  he  lingers 
about  the  City  Hall  and  becomes  acquainted  with  city  coun- 
cilmen  he  will  find  that  at  least  one  president  of  a  street 
railroad  corporation  places  a  goodly  portion  of  his  patron- 
age, positions  as  conductors  and  drivers,  at  their  service. 
Yet  corruption  of  this  sort  is  not  so  bad  in  Baltimore  as  else- 
where. Baltimoreans  have  never  been  so  robbed  as  New 
Yorkers  and  Bostonians,  for  we  do  at  least  receive  nine  per 
cent,  of  gross  revenues  from  street-car  lines  for  the  use  of 
streets,  in  addition  to  regular  taxes.  If  the  investigator  goes 
to  Annapolis,  he  will  find  men  in  the  legislature  with  railroad 
passes  in  their  pockets,  making  money  from  railroads.  Is 
it  any  wonder  that  bills  to  make  railroads  pay  their  fair  share 
of  taxes  failed  lo  pass  the  recent  legislature?  If  one  goes  to 
Boston,  one  may  hear  ihe  name  of  an  admirable  man,  once 
a  member  of  the  state  legislature,  who  was  not  sent  to 
Congress  because  he  tried  to  get  a  law  passed  preventing 
members  of  the  state  legislature  from  accepting  passes. 
One  may  go  to  a  Western  city,  and  find  both  Republican 
and  Democratic  members  of  the  city  council  elected  by 
a  street  railroad  corporation  which  controls  both  parties. 

It  may  be  well,  however,  to  mention  some  facts  which 
have  come  to  my  knowledge,  as  an  illustration  of  existing 
methods.  The  last  convention  of  the  dominant  political 
party  in  a  certain  state,  adopted  a  platform  in  which  it  was 
demanded  that  corporations  should  pay  their  fair  share  of 
taxes.  The  party  pledged  itself  lo  change  the  laws  of  taxa- 
tion so  as  to  meet  the  requirements  of  this  plank  in  their 
platform  in  case  the  party  received  a.  majority.  The  taxa- 
tion of  corporations  was  the  rallying  cry  of  the  campaign. 

'  I  do  not  mean  lo  say  thai  all  uf  tliese  headi  gf  deparlmenta  make 


NATURAL   MONOPOLIES. 

The  candidates  of  the  party  received  large  majorities,  and  a 
bill  to  tax  corporations  was  introduced  in  the  legislature. 
This  bill  was  defeated  by  the  efforts  of  the  attorney  of  one  of 
the  most  powerful  railroad  corporations  in  the  United  States* 
and  of  the  attorney  of  a  great  telegraph  company.     Of  thes« 
two  attorneys  one  was  president  of  the  convention  of  the   i 
dominant  party,  to  which  reference  has  been  made,  and  the 
other  wrote  the  platform  I     The  state  in  which  this  hap-    , 
pened  is  not  named,  but  every  one  acquainted  with  practi-    ' 
cal  politics  can  duplicate  it.     It  is  merely  typical. 

Everywhere  the  facts  arc  the  same,  and  it  must  be  so. 
When  it  is  attempted  to  control  private  corporations,  a 
divergence  of  interest  between  the  public  and  private  par- 
ties arises,  and  this  makes  the  temptation  to  comiption 
irresistible.  Is  not  this  sufficient  to  show  how  far  they  are 
from  going  to  the  bottom  of  things  who  think  that  any  petty 
device  which  does  not  go  below  the  surface  of  things  will 
reform  our  political  life?  This  can  never  be  effected  with- 
out a  fundamental  change  in  the  relations  between  the  public 
and  natural  monopolies.  The  moment  a  town,  even  a  small 
city  or  village,  intrusts  water  supply  or  gas  supply  to  a 
vale  corporation,  that  moment  a  dangerous  political  element  K 
is  mtroduced.  Cities  which  practice  self>help  rather  than  i 
reliance  on  corporations  will  be  found  to  be  better  served  | 
and  purer  in  their  political  life.' 

Harbors  and  water-front  ought  to  be  municipal  property,  J 
on  account  of  their  character  as  monopolies,  and  on  account  J 
of  the  revenues  which  they  yield. 


'  Tliia  matter  wouUI  require  loo  much  »pacc  lo  be  trei 
ively  here,  and  I  hardly  fe*l  Juttilied  in  devuiing  mure  «p{ 
hive  discussed  "  Nalural  Monopolies"  al  some  length  ii 
lems  ofTo-Day,"  -ihurlly  to  appeu'  in  book  form. 


278 


TAXATION  AS  IT  SHOULD  BE. 


Abattoirs,  or  slaughter  houses,  are  best  rendered  a  legal 
monopoly,  and  owned  by  cities.  They  can  readily  be  made 
to  yield  a  considerable  revenue. 

Markets  are  very  generally  owned  by  cities,  and  this 
ownership  has,  so  far  as  I  know,  without  exception  proved 
advantageous  and  has  been  a  considerable  source  of  rev- 
enue.' 

States  cannot  well  build  and  operate  railroads,  because  rail- 
roads are  national  in  their  character,  and  the  only  authority 
which  can  deal  with  them  satisfactorily  is  the  federal  govern- 
ment. Yet  the  fact  that  they  are  natural  monopoUes  enables 
states  to  derive  considerable  revenue  by  carefully  guarding 
public  property  and  public  rights.  It  has  been  suggested  tliat 
cities  build  iraion  depots,  and  that  each  city  compel  all  rail- 
roads to  use  the  same  one  and  pay  rental.  This  would  be  a 
great  convenience,  bm  would  require  legislative  sanction. 
The  example  of  Illinois  is  suggestive.  That  commonwealth 
reserved  seven  per  cent,  of  gross  revenues  of  the  Illinois 
Central  Railroad  for  the  franchise,  as  Baltimore  City  has 
reserved  nine  per  cent,  of  gross  revenues  of  street-car  receipts 
for  municipal  expenses.  Such  bargains  might  often  have 
been  made  in  earlier  days,  and  opportunities  to  make  them 
will  still  occur,  especially  in  large  states  like  Texas  and  Cali- 
fornia. Of  course  the  difficulty  is  that  the  railroads  usually 
control  the  legislatures,  and  that  these  sacrifice  the  people, 
and  grant    franchises   for   the    benefit  of  private  corpora- 

The  state  of  Maryland  is  the  chief  owner  of  the  Chesa- 
peake and  Ohio  Canal,  running  from  Cumberland  in  the 
coal  regions  in  the  western  part  of  the  state  to  Georgetown, 
D.C."  It  has  been  proposed  that  a  part  of  this  be  leased  to 
the  Western  Maryland  Railroad  for  an  extension  of  its  tracks 


'See 


■I  IV. 


NATURAL   MONOPOLIES. 


279 


along  the  tow-path.  If  that  or  any  part  of  the  canal  is 
abandoned,  it  should  be  sold  at  auction  for  a  percentage  of 
gross  revenues.  Similar  cases  will  occur  in  other  states. 
Charters  should  always  be  limited,  and  right  of  repurchase 
of  every  natural  monopoly  at  an  appraised  valuation  re- 
served. 


CHAPTER  VI. 

TAXATION   OF   THE    MANUFACTURE  AND   SALE  OP 
INTOXICATING   LIQUORS. 

MODIFIED    PROHIBITiON. 

THE  scDliment  in  favor  of  restricting  the  liquor  traffic  is 
in  our  Southern  states  daily  increasing  in  strength,  and 
some  of  our  best-known  and  most  respected  public  men  have 
pronounced  in  favor  of  total  prohibition.  This  sentiment  has 
been  the  natural  outgrowth  of  the  actual  condition  of  affairs, 
for  the  liquor  saloon  is  seen  to  be  the  bane  of  politics  as  well 
as  a  curse  to  our  industrial  and  domestic  life.  While  public 
sentiment  will  not  warrant  prohibition  in  all  parts  of  a  state 
bke  Maryland,  it  is  evidently  time  to  proceed  lo  place  re- 
straints upon  the  liquor  traffic. 

I  recommend,  in  my  report  to  the  Maryland  legislature, 
that  the  number  of  places  where  liquor  may  be  sold  be  lim- 
ited to  one  lo  every  two  thousand  of  the  population  in  incor- 
porated cities,  and  to  one  to  every  fifteen  hundred  of  the 
population  in  those  parts  of  coimties  outside  of  incorporated 
cities  ;  that  the  municipalities  and  counties  be  divided  into 
liquor  districts  accordingly,  and  that  once  a  year  the  right  to 
sell  liquor  in  each  be  sold  at  public  auction  to  the  highest  bid- 
der, under  heavy  penalties  for  violation  of  Sunday  law  and 
laws  relating  to  sale  of  liquor  to  minors,  and  to  other  matters 
which,  for  the  public  good,  may  be  included  within  liquor 
laws.  The  prohibitionists  in  their  organ  admil  ihat  a  largely 
diminished  number  of  saloons  diminishes  the  liquor  traffic, 


TAXATION   OF  LIQUOR'i. 


281 


I 
I 


and  experience  of  other  countries  seems  to  confirm  this. 
Why  cannot,  then,  all  good  people  unite  on  such  a  measure 
which  would  at  the  same  time  yield  a  large  revenue  ?  The 
right  to  prohibit  the  sale  of  li<iuor  by  popular  vote  in  any 
municipality  or  county  could  and  should  lie  coupled  with  this. 

Il  will  doubtless  be  urged  that  the  revenues  which  would 
be  derived  under  such  a  system  from  dealers  in  intoxicating 
liquors,  would  wed  the  tax-payers  to  it,  and  render  prohibi- 
tion either  extremely  difficult  of  attainment  or  an  impossi- 
bility. This  objection  is  urged  against  ordinary  high  license. 
Modified  prohibition,  however,  is  essentially  different.  It 
limits  at  once  and  absolutely  the  number  of  places  where 
intoxicating  liquors  may  be  sold,  and  it  is  possible  to  couple 
with  modified  prohibition  the  provision  that  any  violation  of 
laws,  of  whatever  degree  of  severity,  shall  work  a  forfeiture 
of  the  license.  Each  one  who  has  an  exclusive  right,  pur- 
chased at  a  high  price  within  a  certain  territory,  becomes  an 
agent  of  the  police  ;  for  if  he  does  not  help  to  enforce  the 
law,  unauthorized  dealers  will  ruin  him.  This  plan  does  not 
work  against  prohibition,  but  where  the  liquor  traffic  exists 
it  compels  this  traffic  to  defray  a  large  part  of  the  public 
expenditures,  and  this  seems  right  because  drunkenness  is 
the  cause  of  a  good  portion  of  the  expenses  of  government. 

It  cannot  be  doubted  that  the  relief  of  the  lax-payer, 
brought  about  by  large  revenues  derived  from  sales  of  exclu- 
sive rights,  will,  to  a  certain  extent,  strengthen  the  liquor 
traffic.  This  objection  to  high  license  must  have  weight 
with  those  who  desire  to  see  an  ultimate  triumph  of  prohi- 
bition. It  is,  however,  more  than  offset  by  other  features  of 
modified  prohibition.  It  concentrates  the  liquor  traffic  in 
huge  establishments,  and  drags  it  before  the  public  where  all 
its  evils  must  be  conspicuous.  Private  monopoly  is  odious, 
and  this  odium  would  offset  any  advantage  which  manufact- 


TAXATION  AS  IT  SHOULD  BE. 

■s  and  dealers  in  intoxicating  liqiiors  might  derive  from  a 
very  considerable  portion  of  the  public  expenses. 
It  is  difficult  to  tell  of  any  other  way  in  which  this  entire 
business  could  better  be  placed  on  its  own  merits  or  de- 
merits, as  the  case  may  be.  The  plan  formerly  pursued  on 
the  continent  of  Europe  was  to  Hmit  absolutely  the  number 
of  saloons.  No  additional  license  was  granted  unless  there 
appeared  to  be  need  of  additional  places  for  the  sale  of 
intoxicating  beverages.  This  plan  was  also  followed  in  old 
New  England.  The  following  quotation  is  from  the  records 
ofthecourt  at  Springiieid,  Massachusetts,  in  September,  1677  ; 
"  There  being  presented  to  this  court  the  desires  of  some 
for  liberty  to  sell  wines  and  liquors  to  iheir  neighboin^,  in  our 
towns,  with  promise  to  sell  at  reasonable  rates,  this  court 
doth  not  see  reason  to  grant  such  desires,  but  orders  that  it 
be  declared  to  the  ordinary  keepers  that  it  is  expected  that 
they  seil  their  wines  and  liquors  at  reasonable  rates,  or  that 
otherwise  the  court  will  put  upon  it  to  seek  ways  for  help  by 
granting  license  to  others  to  sell  or  otherwise."  Although 
every  one  appears  to  have  kept  cider  and  stronger  liquors, 
by  order  of  the  court,  in  1675,  no  liquors  could  be  sold 
except  to  the  heads  of  families,  save  by  the  regular  licensed 
ordinaries.'  These  old  methods  of  favoritism  are  not  possi- 
ble now.  It  was  necessary  to  abandon  them  in  Germany 
under  the  influence  of  democratic  ideas,  and  the  effects  of 
an  increased  number  of  licenses  were  seen  in  an  alarmingly 
increased  amount  of  drunkenness  and  wretchedness.  It  is, 
indeed,  unjust  to  give  special  favors  to  a  few  who  already 
have  privileges.  Public  auction  is  not  favoritism.  The  right 
to  sell  goes  to  the  highest  bidder.  This  gives  us  the  advan- 
tages of  the  old  system  of  restriction,  without  the  disad- 
vantages of  favoritism. 


I 


'From  Dr   Ben 
lemi,"  to  which  rcferen 


■■  OIH  Timi 


,  to  Prcscnl  Ptub- 


TAXATION  OF  LIQUORS. 


HIGH    LICENSES. 


Wholesale  dealers  might  be  charged  a  license  fee  of  Szooo 
each,  and  also  be  obliged  to  pay  a  business  tax  of  ten  per 
cent,  of  the  annual  rental  value  of  iheir  places  of  business. 
This  additional  tax  could  be  placed  also  on  retailers. 

High  license,  considered  simply  from  a  pecuniary  stand- 
point, yields  large  returns,  and  if  any  license  is  granted,  why 
not  a  high  license?  A  license  fee  of  S500  for  the  country, 
and  Jiooo  for  the  city,  is  not  too  high.  The  Illinois  license 
system  compels  all  local  bodies  to  charge  at  least  S500,  and 
allows  them  to  charge  as  much  more  as  they  please,  and 
even  to  suppress  it  altogether.  The  minimum  charge  for 
beer  selling  alone  is  J 150,  but  local  authorities  have  generally 
raised  it  to  £500.  It  is  stated  that  the  number  of  saloons 
has  been  reduced  from  13,000  to  gooo,  and  the  revenue  from 
these  licenses  raised  from  Jyoo.ooo  to  ^4, 500,000.' 

In  Missouri  the  minimum  license  fee  is  $550,  and  the 
maximum  2 1200.  The  revenue  from  license  fees  increased 
from  ^600,000  to  (2,01 

The  charge  for  a  iicense  in  Michigan  is  ^500,  and  for  one 
doing  a  wholesale  and  retail  business,  £800.  The  amount 
of  revenue  reported  by  the  county  treasurers  of  Michigan 
for  1885  was  81,067,005.77;  for  1886,  $1,186,366.95. 

Pennsylvania  has  inaugurated  a  new  high  license  system. 
The  charge  for  a  license  is  $500  in  the  largest  cities,  and 

'  Tbc  annual  itatemenl  of  Ihc  finances  of  Chicago  fur  18S7  ihowi 
Ihat  the  iiDount  icceiveii  fur  licenses  diuinglbal  year  vr»s  12,225,768.71. 
This  sum  must  include  othcT  licenses  Ihan  liijuur  licenses,  although  by 
far  Ihe  grealer  amouni  undoubtedly  comes  from  liquor  licenses.  Prnp- 
erty  utxes  yielded  during  the  year  $5,166,155.73,  and  Ihc  tolnl  rcceiptl 
ttmiiunied  lo  116,127,832.03.  Part  of  the  sum  WB8  on  accounl  of  re- 
funding apetations  and  api 


284  TAXATION  AS  IT  SHOULD   BE. 

liquor- dealers  must  secure  two  bondsmen  with  real  estate 
valued  at  Sjooo.  These  bondsmen  must  be  reputable  citizens 
and  must  not  be  engaged  in  the  manufacture  of  intoxicating 
liquors.  No  man  can  be  bondsman  for  more  than  one  appli- 
cant. This  provision  makes  it  more  difficult  than  elsewhere 
to  secure  licenses,  for  in  other  places.  Illinois  for  example, 
brewers  go  on  the  bond  for  dealers,  and  one  man  will  often  act 
as  bondsman  for  half  a  dozen  dealers.  It  is  also  provided  that 
citizens  may  appear  before  the  board  granting  the  licenses, 
and  enter  objection  against  any  applicant,  on  the  ground  that 
he  is  a  law-breaker  or  disreputable  character,  and  if  the  fact 
is  established,  the  license  must  be  withheld.  It  is  expected 
that  the  number  of  saloons  in  Philadelphia  wilt  be  reduced 
from  6000  to  less  than  3000  under  the  operations  of  this 
law.  It  leaves  a  good  deal,  it  will  be  noticed,  to  the  discre- 
tion of  the  body  granting  licenses,  which  is  the  court  of 
quarter  sessions,  and  by  shutting  out  many  competitors 
increases  the  value  of  a  license  to  the  one  who  receives 
it,  while  the  full  value  of  the  license  is  not  secured  to  the 
public.  Room  is  opened  for  political  abuse  of  the  right 
to  grant  licenses.  The  auction  plan  secures  the  full  value 
of  the  license  for  the  public,  and  does  not  offer  opportunities 
for  favoritism.' 

The  charge  for  a  license  in  cities  of  Nebraska  is  ^looa, 
and  in  smaller  places,  ^500.  Il  is  said  that  one-half  of  the 
saloons  in  Omaha  have  been  suppressed,  and  that  the  reve- 
nues from  this  source  have  increased  from  550,000  to  nearly 
$250,000.  The  license  taxes  are  the  same  in  Minnesota  as 
in  Nebraska.     Minneapolis  has  a  peculiar  system,  resembling 

I  The  Pennsylvinia  law  incluiles  the  old  Teutonic  idea  lli&t  licensei 
■hoold  be  granted  anly  where  there  is  need  of  it  liquur  seller  for  public 
conveaicnce.  Il  mast,  according  tn  the  lair,  be  shown  "  that  the  place 
to  be  licenied  is  peceuaiy  for  the  Kccomniodation  of  the  public." 


I 


TAXATION   OF  LIQUORS. 

somewhat  the  system  of  modified  prohibition.  No  liquor 
at  all  may  be  sold  outside  of  a  certaio  district  in  the  heart  of 
a  city,  or  outside  of  the  patrol  limits,  as  these  limits  are 
usually  called.  This  seems  to  be  a  good  feature  of  a  high 
license  system.  It  is  described  in  these  words  by  a  gentle- 
man of  Minneapolis,  of  the  highest  integrity  and  intelligence  : 
"  Our  plan,  you  know,  is  an  effective  restraint  of  the  traffic 
inside  the  actively  patrolled  business  districts  of  the  city, 
the  line  having  been  originally  fixed  by  the  mayor  and  the 
city  cotinci!  in  the  spring  of  1SS4,  and  placed  in  the  charter 
by  the  legislature  just  a  year  ago.  It  was  adopted  concur- 
rently with  an  increase  of  saloon  license  from  8100  to  (500 
and  a  new  regime  of  strict  enforcement  of  law.  The  conse- 
quence was  the  closing  of  all  establishments,  perhaps  seventy- 
five  or  one  hundred,  outside  the  line,  and  a  still  greater 
reduction  through  the  operation  of  high  license  inside  the 
line.  The  last  legislature  by  a  general  law  for  cities  made 
the  license  fee  J 1000;  and  this  has  redmed  the  number  of 
saloons  very  materially  ;  not  more  ih.m  ono-iwdfth,  I  should 
estimate,  of  the  area  of  the  present  corporate  limits  of  the 
city  is  included  in  the  liquor  limits.  Probably  four-fifths  of 
the  population  live  outside  the  limits.  Saloons  eliminated 
from  workingmen's  residence  neighborhoods  have  an  excel- 
lent moral  eflfect.  Citizens,  regariUess  of  parly,  would  resent 
a  widening  of  the  limits  if  that  should  mean  encroachment 
upon  their  territory  or  residence  n^ighlmrhood.  It  is  a  self- 
sustaining  arrangement  when  oni  e  established,  and  almost 
self- en  forcing.     It  has  proved  highly  satisfactory."  ' 

1  Some  of  the  sWlisUci  in  this  cliaplei 
the  A^o/ioo  for  Jan.  12,  188H.  Biid  Kcb.  16, 
that  the  Nalian  ia  on  enlbiumilic  »dv<iL-a 
conclusion*  and  facts  are  huth  callcil  in 
Frobihitioii  mmit  the  loppreuion   of  all 


ire  lakcn  from  utida  ii 
(KS.  It  is  only  fair  to  la] 
uf  hi^h  license,  and   it: 


J 


286 


TAXATION  AS  IT  SHOULD  BE. 


intoxicating  liquors.  Its  advocates  generally  claim  that  it  is  sinfal  tc 
authorize  by  law  the  existence  of  such  a  curse  as  the  liquor  traf&c, 
and  that  to  derive  profit  from  it  makes  the  community  a  partici- 
pator in  its  crime.  This  is  a  phase  of  the  subject  which  it  can  hardly 
be  expected  that  I  should  treat  in  a  work  on  taxation.  It  comes  more 
properly  within  the  scope  of  moral  science.  From  a  narrow  financial 
standpoint,  high  license  is  an  undoubted  success.  Nevertheless,  it 
must  be  confessed  that  there  is  reason  to  look  with  apprehension  upon 
the  large  revenues  derived  by  high  license.  These  are  a  bribe  to  the 
public.  But  if  the  choice  is  between  low  license  and  high  license,  it 
seems  to  me  that  high  license  is  the  lesser  of  the  two  evils. 


;i''- 


CHAPTER  VII. 


TAXATION   OF   INCOMES. 


THE   POSITION  OF  AN   INCOME  1 


I  SYSTEM   OP  TAXES. 


THE  taxes  which  have  already  been  described  are  suita- 
ble for  local  purposes.  The  central  tax  of  a  proper  ] 
system  of  local  taxation  is  the  tax  on  real  estate ;  and  this 
will  vary  from  year  to  year  according  to  the  needs  of  the 
public  treasury.  An  estimate  must  first  be  made  of  the 
revenues  from  productive  property  and  local  enterprises, 
from  natural  monopolies,  from  liquor  licenses,  and  from  all 
other  sources,  and  then  a  tax-rate  on  real  estate,  just  high 
enough  to  make  up  what  is  still  lacking  should  be  fixed.  It 
ought  not  in  any  American  city  to  exceed  one  per  cent-  of 
the  true  selling  value  of  the  property. 

The  central  and  variable  tax  in  a  proper  system  of  state  I 
taxation  ought  to  be  an  income  tax.  This  should  vary  frum  I 
year  to  year  according  to  the  needs  of  the  state  government,  I 
and  its  rate  should  be  calculated  after  the  revenues  from! 
other  sources  have  been  estimated. 


EQUAUTY    OF  TAXATION   IMPOSSIBLF.  WrFHOUT  AN   INCOME  TAX. 

It  has  already  been  stated  in  this  work  that  the  farmers  of 
Mar>'Iand  and  her  sister  states,  and  other  hard-working  peo- 
ple, are  right  in  iheir  feeling  that  all  men  of  means  si 
contribute  to  the  support  of  government  in  proportion  to 
their  ability.  It  is  a  just  grievance  that  many  who  can 
amply  afford  to  bear  a  pan  of  the  burdens  of  government 


k 


do  not  participate  in  them,  while  they  do  derive  inestimable 
benefits  from  the  existence  of  government.  There  is  one 
way,  and  only  one,  to  remedy  that  evil,  and  that  is,  by  an 
income  tax,  which  requires  calm  and  judicial  examination, 
undislurbed  by  the  hue  and  cry  raised  by  tax-dodgers  or 
even  by  the  prejudiced. 

First.  It  is  universally,  or  almost  universally,  admitted 
that  no  tax  is  so  just,  provided  it  can  be  assessed  fairly 
and  collected  without  difficulty.  More  nearly  than  any 
other  tax  does  it  answer  the  requirements  of  that  canon  of 
taxation  which  prescribes  equality  of  sacrifice.  Furthermore, 
it  is  of  moment  that  ihe  income  tax,  unlike  license  charges, 
does  not  make  it  more  difficult  for  a,  poor  man  to  begin 
business  or  to  continue  business.  Its  social  effects,  on  the 
contrary,  are  Iseneficial,  because  it  places  a  heavy  load  only 
on  strong  shoulders.  Even  for  men  of  large  means  engaged 
in  business  it  is  a  tax  to  be  strongly  recommended,  for  such 
men  will  in  some  years  make  tittle  or  nothing,  or  even  lose 
money.  Now,  our  property  tax  is  merciless ;  it  exacts  as 
much  in  a  year  when  a  business  man  is  struggling  to  keep 
his  head  above  water  as  in  a  year  of  rare  prosperity  ;  whereas 
the  income  tax  exacts  much  only  when  much  tan  be  given 
( without  financial  embarrassment.  If  it  were  practicable  to 
f  substitute  an  income  tax  for  the  whole  of  the  properly  tax,  it 
I  would  save  many  a  man  from  bankruptcy.  I  will  repeat, 
with  some  modification,  in  this  connection,  words  I  used  i 
my  special  report  as  member  of  the  Baltimore  Tax  Com-  ' 

It   is   the   fairest    tax   ever   devised ;    it  places  a  heavy 
burden  when  and  where  there  is  strength  to  bear  it,  and 
lightens  the  load  in  case  of  temporary  or  permanent  weak- 
ness.    Large  property  does  not  always  imply  ability  to  pay   I 
taxes,  as  taxes  should  come  from  income  ;  even  when  assessed   f 


TAXATION  OF  INCOMES. 

on  property  it  is  only  an  indirect  device  for  estimating  in- 
come.    An  income  tax  spares  ihe  business  man  in  season  I 
of  distress  and  helps  him  to  weather  the  storm,  but  a 
return  for  the  consideration  shown  in  days  of  increasing'  k 
prosperity. 

AN  INCOME  TAX   WILL  PROMOTE   GOOD  GOVERNMENT. 

Again,  why  should  the  tnan  with  a  large  income  but  with 
no  property  escape  all  share  in  the  common  burdens  ?  There 
is  a  considerable  and  increasing  class  living  in  great  comfort 
on  incomes  of  large  proportions,  say  five,  ten,  twenty,  thirty, 
or  forty,  or  even  fifty  thousand  dollars,  who  by  insurance 
and  various  devices,  protect  themselves  and  their  families 
for  the  future,  and  yet  pay  no  taxes.  This  is  an  injustice  10 
other  classes  and  a  harm  to  the  commonwealth,  because 
these  men  are  often  careless  and  indifferent  about  their 
public  duties,  knowing  that  their  income  is  not  affected  by 
high  or  low  taxation.  They  appear  to  pay  nothing  to  gov- 
ernment, and  as  it  seems  to  cost  them  nothing,  they  too 
often  care  little  for  it. 

One  of  the  reasons  of  poor  government  in  our  states  and 
cities  is  to  be  found  in  the  failure  of  large  and  influential 
classes  to  concern  themselves  about  practical  politics.  They 
often  speak  of  politics  with  an  affectation  of  superiority,  as 
if  they  were  above  anything  so  base  and  common.  This 
altitude  is  not  imcommon  among  professional  people,  as 
lawyers,  physicians,  and  teachers.  These  men  have  oppor- 
tunities for  personal  cultivation  and  for  gathering  knowledge 
which  are  better  than  those  enjoyed  by  other  members  of 
the  community,  and  their  influence  ought  to  be  large  and 
beneficial.  They  must  pay  taxes  because  indirect  federal 
taxes  form  a  part  of  the  price  of  commodities  which  they 
purchase,  and  because  a  considerable  portion  of  our  direct 


ect  ^H 


TAXATION  AS   IT  SHOULD  BE. 

I,  like  the  tajt  on  house  property,  is  shifted  and  reaches 
them  indirectly.  This,  however,  is  not  noticed.  Wliat  is 
needed  is  a  tax  varying  with  public  needs,  and  with  the  integ- 
rity and  efficiency  ofadministration,  which  will  reach  the  great 
ilizens,  —  a  tax  which  will  directly  and  immediately 
rest  upon  the  lax-bearer.  We  have  too  few  payers  of  direct 
taxes  in  our  stales  and  cities ;  but  the  income  tax  is  a  tax 
which  is  felt  and  which  must  be  paid  by  the  tax-bearer. 
is  precisely  the  kind  of  a  tax  needed,  and  it  is  beyond  ques- 
n  that  it  would  change  the  altitude  of  a  large  portion  of 
the  community  towards  government. 

The  incomes  enjoyed  by  the  professional  and  salaried 
classes  and  some  others  are  frequenlly  the  resule  of  large 
expenditures  in  cultivating  one's  jiowers,  and  they  create 
what  can  be  called  personal  wealth.  One  man  spends 
|io,ooo  in  preparing  himself  for  some  lucrative  position, 
and  derives  therefrom  an  income,  but  pays  no  taxes,  while 
the  man  who  spends  Jio.ooo  on  a  farm  must  contribute 
every  year  a  sum  large  in  proportion  to  income  for  the 
support  of  government. 


CtJRKENT  OBJECTION 

Some  of  the  current  objecl 


AX  INCOME  TAX. 

against  the  income  tax 


It  is  said  to  be  '"'^"'"■^gri'''-  \Vhat  tax  is  not?  What 
tax  is  in  fact  less  so?  Does  the  tax  on  whiskey  and  tobacco 
involve  a  less  searching  examination  into  private  affairs? 
On  the  contrary,  the  manufacturer  of  tobacco  and  ihc 
whiskey  distiller  must  expose  their  every  operation  to  in- 
spection, and  they  are  surrounded  by  spies.  Those  vrfio 
try  to  evade  the  tax  are  frequently  hunted  down  like  wild 
beasts,  and  its  coilertion  is  altenrletl  with  bloodshed  of  tax-  I 
payer  and    tax- col  lee  lor.      Is    the    tariff  leas   inquisiloriall  I 


TAXATION   OF  INCOMES. 


2911 


I 


On  entering  an  American  port  you  must  open  your  trunk 
and  exhibit  all  you  have,  and  in  case  of  suspicion,  your  very 
person  is  liable  to  be  searched.  Is  the  personal  property 
tax  less  inquistlorial?  By  no  means.  The  income  tax  asks 
one  question,  while  the  personal  property  tax,  if  really 
enforced,  demands  every  item  of  personal  property,  and 
involves  an  exposure  of  all  assets  and  liabilities.  Anything 
more  inquisitorial  cannot  be  conceived.  We  talk  about 
the  European  sj'slem  of  government  espionage  and  prying 
into  one's  affairs,  but  the  German  writer.  Baron  von  Reit- 
zenslein,  who  wrote  the  review  of  the  Baltimore  Tax  Com- 
mission's report,  to  which  reference  has  already  been  made, 
called  attention  to  precisely  these  features  in  our  personal 
property  tax,  as  noteworthy.  He  said  it  was  like  the 
examination  made  in  his  country  of  the  estate  of  dece- 
dents in  the  probate  court.  It  is  said  that  it  produce* 
periury.  but  existing  taxes  are  still  more  demoralizing. 

It  is  said  that  it  is  difficult  to  assess  it  fairly.  It  is  incom- 
parably more  difficulI~To  assess  a  personal  property  tax 
feirly.  It  is  so  much  easier  to  assess  an  income  tax  that 
assessors  sometimes  first  assess  a  man's  income,  and  then, 
on  the  basis  of  that  estimate,  his  probable  personal  property. 
This  plan  is  sometimes  followed  in  the  City  Hall  in  Balti- 
more. It  is,  indeed,  on  this  account  that  a  part  of  the 
prejudice  against  the  income  tax  exists.  I  do  not  intend 
lo  express  any  condemnation  of  men  of  large  means  as  a 
class,  but  you  will  find  among  them,  as  in  all  classes  of 
society,  unscrupulous  persons.  Now,  these  found  the  income 
tax  a  less  easy  tax  lo  evade  than  the  personal  property  lax, 
and  precisely  on  that  account  they  raised  a  hue  and  cry, 
which,  by  reason  of  their  control  over  influential  newspapers, 
attracted  undue  attcniion.  In  the  case  of  ihe  federal  in* 
come  tax,  its  very  excellence  was  turned  against  it    A  chief 


I 


292  TAXATION  AS   TT  SHOULD   BE. 

tobjcction  to  it  was  that  it  accomplished  precisely  what  it 
Was  intended  to  accomplish. 

No  one  pretends  that  the  publication  of  the  valuation  of 
a  man's  personal  property  will  injure  him  in  any  way  or 
destroy  his  credit ;  that  was  allej^ed  with  reference  lo  income 
tax.  Why  the  difference?  Because  the  one  was  more 
nearly  accurate  than  the  other.  No  one  attaches  any  im- 
portance to  the  publication  in  the  newspapers  of  personal 
estates  taxed  in  New  York  and  Brooklyn,  but  importance 
was  attached  to  the  income  tax  returns. 

Any  one  who  is  honest  must  confess  that  it  is  easier  to 
discover  income  than  personal  property.  I  own  a  promis- 
sory note,  but  where  it  is  I  do  not  know.  How  can  a  tax- 
assessor  find  it?  If  he  linds  it,  how  can  he  tell  wliat  it  is 
worth?  1  do  not  know  myself.  It  may  be  paid  and  it  may 
not  be  paid.  If  I  receive  any  income  from  it  in  the  shape 
of  interest,  that  is  something  which  I  know,  I  have  some 
copyrights.  What  are  they  worth  ?  I  do  not  know.  How 
can  an  assessor  tell?  What  income  they  yield  during  any 
one  year  is  a  matter  which  I  know  well  enough.  How  can  an 
assessor  find  any  evidence  of  the  fact  that  I  am  the  owner 
of  a  copyright?  There  is  not  one  assessor  in  a  thousand  to 
whom  it  ever  occurs  that  such  a  form  of  personal  property 
exists.  If,  however,  I  derive  an  income  from  my  promis- 
sory note  and  from  my  copyrights,  it  is  altogether  probable 
that  I  may  give  some  evidence  of  the  receipt  of  income. 
The  style  in  which  I  live,  the  property  I  purchase,  and  a 
thousand  and  one  acts  give  evidence  of  income.  Il  is  not 
asserted  that  it  is  always  an  easy  thing  lo  tell  what  income 
is  1  but  it  is  incomparably  easier  than  to  discover  intangible 
property.  The  facts  just  given  are  merely  typical.  Every 
business  man  can  duplicate  them.  Anv  one  who  is  willing  ] 
to  accept  the  taxation  of  personal  property  as  a  just  and    ' 


TAX  AT  toy  OF  INCOMES. 


293 


I 


proper  mode  of  taxation,  and  at  the  same  lime  objects  to  an 
income  tax  on  the  grounds  that  it  is  inquisitorial  in  nature, 
and  that  income  cannot  be  fairly  assessed,  must  not  be 
surprised  if  either  his  intelligence  or  his  sincerity  is  called 
in  question. 

A  further  indication  of  the  tact  that  a  general  personal 
property  tax  b  tolerated  only  because  laws  and  constitu- 
tional provisions  are  not  enforced,  is  seen  in  the  fate 
which  usually  overtakes  reports  of  tax  commissions.  Some 
people  feel  dissatisfied  on  account  of  undue  and  unequal 
taxation,  and  instigate  the  appointment  of  a  tax  commission. 
*s  a  rule  the  force  of  tradition  and  prejudice  is  such  that  no 
idical  changes  are  recommended,  but  laws  are  recom- 
nended  which  simply  aim  to  enforce  the  existing  system. 
The  reports  are  then,  with  or  without  due  form  and  cere- 
mony, buried,  and  sleep  the  sleep  from  which  there  is  no 
awakening. 

A  special  tax  commission  made  a  report  to  the  South 
Carolina  legislature  on  taxation  in  1886,  which  had  no  olhei 
design  in  the  worid  than  to  enforce  the  law,  and  this  is  what 
a  disgusted  advocate  of  the  tax  commission's  recommenda- 
tions wrote  me  in  regard  to  their  bill :  "  It  was  killed  in  the 
Senate  before  one-fourth  of  it  had  been  discussed.  This 
was  done  because  it  was  said  that  their  suggestions  were  too 
inquisitorial,  etc.  The  ignorance  of  legislators  generally  was 
never  more  gross  and  patent  than  in  this  instance,  for  it  is  a 
fact  that  every  one  of  these  so-called  '  suggeslions '  of  the 
commbsioQ  (upon  which  the  Senate  was  induced  to  kill  the 
bill)  were  'original  suggestions'  taken  verbatim  from  the 
existing  tax  law  I  The  bill,  of  course,  never  reached  the 
House  of  Representatives,  and  was  not  discussed  by  that 
body." 


I 


29t  TAXATJOy  AS  IT  SHOULD   BE. 

It  has  been  said  ihai  out  Balumore  Tax  Commission' 
report  was  killed  by  the  pressure  from  business  men  even 
before  the  State  Tax  Commission '  was  appointed.  Now, 
for  this  they  can  scarcely  be  blamed  severely,  for  to  enforce 
the  law  would  have  injured  the  city  generally.  Perhaps  it 
can  at  most  be  said  that  they  should  either  have  favored  the 
enforcement  of  law  or  have  agitated  for  its  repeal. 

INCOME  TAX  AND  PERSONAL  PROPERTY  TAX  CONTRASTED. 

Now,  we  have  in  the  personal  property  tax  a  lax  which 
grows  in  disfavor,  as  it  year  by  year  becomes  more  and  more 
unsuitable  to  our  industrial  situation.  In  the  income  tax, 
on  the  contrary,  we  have  a  tax  which  is  congenial  to  the 
spirit  of  democracy,  and  which  tends  to  become  more  gen- 
eral as  the  masses  acquire  power ;  a  tax  which,  wherever  it 
has  been  honestly  Ined,  is  administered  with  increasing  ease 
and  justice,  and  which  grows  unintemiptedly  in  popular 
favor.  The  present  income  tax  in  England  was  introduced 
as  a  temporary  measure  by  Sir  Robert.  Teel,  in  1S4Z.  Its 
object  was  to  raise  funds  "  to  relieve  trade  and  commerce 
from  the  trammels  by  which  tliey  were  hampered  and  bound." 
It  was  imposed  first  for  four  years,  but  was  continued  from 
time  to  time.  The  reform  in  the  tariff  was  begun  and  carried 
out  in  connection  with  the  taxation  of  incomes,  but  for  a  long 
time  it  was  intended  ultimately  to  abolish  the  income  tax. 

'The  commisBioDcrs  were  Messrs.  Juhn  P.  Poe,  Summerfield  Bald- 
win, Rich«d  T.  Ely.  Mr.  Charles  M.  Armslrong  wns  appointed  secre- 
[Biy  of  the  coroDussioD.  The  commiaaiotiera  were  appointed  in  18S5. 
Tfae  report  was  made  in  1386. 

'The  State  Tax  Comniiasion  consisled  of  Messrs.  John  P.  Poe, 
Chules  M.  Amisltong,  aectelxry,  Jamea  Alfred  Pearce,  James  McShcrry, 
and  Richard  T.  Ely.  They  were  appoinleit  in  18S6  and  mnde  their 
report  in  1888.  The  bill  drawn  ap  by  the  stale  commission  was  killed 
by  corporalion  attorneys. 


TAXATION   OF   INCOMES. 


295 


I 


L 


As  time  went  on,  however,  and  it  was  learned  how  to  assess    I 
it  with  an  increasing  approximation  to  perfect  justice,  it  was 
finally  decided  to  keep  it  as  a  permanent  part  of  the  English    I 
financial  system.     The  experience  of  republican  Switzerland 
and  monarchical  Prussia  appears  to  be  equally  favorable  to 
Ihe  income  tax. 

It  is  not  meant  to  assert  that  the  income  tax  is  a  perfect  tax.  i 
No  tax  is.  One  who  desires  may  discover  evidences  that  fault 
is  found  with  it  in  the  countries  in  which  it  exists.  Neverthe- 
less, one  who  asserts  that  it  does  not  meet  with  increasing  ap- 
proval where  it  exists,  seems  to  me  strangely  ignorant  of  the 
facts.  The  reader  is  referred  to  the  foreign  literature  of  taxa- 
tion. Nearly  ail  Americans  who  have  given  the  subject  of 
taxation  attention,  arid  who  can  make  the  slightest  claim  to  be 
consiclercd  authorities,  reject  the  personaf  property  tax  as  un- 
just and  impracticable,  un  ine  oiner  halllj,  1  kinjir-ul'  fiu 
recent  writer  in  any  country,  where  an  income  tax  has  long 
been  in  force,  who  does  not  approve  of  it.  The  test  of  expe- 
rience has  been  decisive  in  both  cases.  John  Stuart  Mill 
speaks  of  an  income  tax  in  his  "  Political  Economy,"  which 
was  written  when  the  present  income  tax  in  England  was  new, 
and  the  impression  which  one  gathers  is  perhaps  unfavorable 
to  the  income  tax,  because,  as  the  "  practical "  business  man 
says,  it  is  theoretically  excellent  but  does  not  work  well  in  prac- 
tice. Mill's  follower,  Fawcett,  whose  general  principles  would 
be  more  unfavorable  to  an  income  tax,  has  evidently  been  con- 
vinced by  experience  that  it  is,  as  taxes  go,  a  just  and  fair 
tax  in  its  actual  workings,  and  he  favors  it  in  the  sixth  edilion 
of  his  treatise  "  Manual  of  Political  Economy,"  published 
in  1883.  The  contrast  between  income  and  personal  prop- 
erty taxes  is  thus  most  striking.  The  longer  the  latter 
last,  the  worse  they  become,  and  the  smaller  the  favor  with 
which  they  are  regarded;  the  longer  the  others  continue, 


I 


296  TAXATION  AS  IT  SHOULD  BE. 

the  better  they  work,  and  the  greater  the  favor  with  which 
they  are  regarded.  The  income  tax  is  a  tax  adapted  to 
the  needs  of  modem  stales.  . 

Our  federal  income  tax  excited  annimosity  on  several 
accounts.  First,  an  income  tax  is  more  suitable  for  a  state 
than  a  federal  government,  because  a  federal  government  is 
something  far  off,  and  the  different  amounts  paid  by  various 
sections  produce  irritation  and  ill-will. 

Second,  designing  men  purposely  made  it  ridiculous,  so 
as  to  render  its  abolition  easier ;  and  the  law  was  always  full 
of  needless  imperfections  in  its  details.'  Third,  it  met  with 
special  disfavor  in  some  parts  of  the  country,  as  in  Maryland, 
it  is  probable,  because  it  was  levied  to  carry  on  a  war  which 
was  not  popular. 

AN   INCOME  TAX   MUST  BE   A   STATE  TAX. 

An  income  tax  is  not  suitable  for  a  city,  because  it  must 
then  act  like  our  pergonal  property  tax  and  drive  people 
from  cities  to  suburbs.  Most  cities  in  America  are  sur- 
rounded with  a  "  tax-payers'  paradise,"  or  a  suburb  to  which 
the  wealthy  resort,  in  order  to  escape  the  payment  of  taxes 
in  the  cities  where  they  gain  a  livelihood.  These  people 
would  similarly  escape  their  fair  share  of  the  income  tax.  If 
any  one  will  take  a  map  of  the  United  States  and  examine 
the  situation  of  our  great  cities,  he  will  hnd  that  there  are 
comparatively  few  who  could  leave  any  American  common- 

'  Before  the  final  stage  of  abiuidily  was  reacbcd,  il  worked,  nflei  all, 
far  beUer  tlian  many  would  have  UB  believe,  and  it  answered  the  de- 
mands of  economical  administration,  fur  it  wu  the  chespcsl  lax  to 
collect  among  all  the  federal  (axes,  with  the  aingle  exception  of  the  taxes 
on  national  banks,  which  cost  nothing  lo  collccl.  It  itid  not  cost  over 
two  per  cent.,  while  the  general  aveiagc  cost  of  collection  was  between 
three  aad  four. 


TAXATION   OF  INCOMES.  297 

wealth  to  escape  a  tax.  New  Yorkers  might  move  to 
New  Jersey,  as  some  do,  but  there  would  be  no  general 
exodus  to  escape  a  light  income  tax,  say  one  of  one  per  cent., 
which  does  not  exceed  a  property  tax  of  one-twelfth  of  one 
per  cent.  Comparatively  few  change  their  states  willingly, 
because  the  ties  to  one's  state  are- more  numerous  and 
stronger  than  to  one's  city.  Moreover,  the  relief  to  business 
and  property  which  would  come  from  a  proper  income  tax 
would  be  so  great  that  ten  would  be  drawn  to  any  state  levy- 
ing it  for  one  who  would  leave. 

ASSESSMENT  OF   AN  INCOME  TAX. 

An  income  tax  for  state  purposes  is  therefore  to  be  recom- 
mended, because,  while  it  is  suitable  for  neither  a  munici- 
pality nor  a  federal  government,  it  can  be  assessed  and 
collected  with  comparative  ease  in  a  state,  and  because, 
while  it  is  not  perfection,  it  conies  nearer  to  it  than  do  most 
forms  of  taxation.  There  are  various  methods  of  assessing 
an  income  tax.  One  is  self-assessment ;  another  is  assessment 
on  part  of  officials,  with  the  right  of  a  lax-payer  to  protest 
and  show  that  his  income  is  less  than  it  has  been  assessed. 
It  is  not  clear  what  heed  should  be  given,  in  these  days  of 
publicity,  to  the  objection  against  publicity  of  income.  How 
can  that  be  worse  for  a  man's  credit  than  our  various  mer- 
cantile agencies,  with  their  estimates  of  the  credit  of  every 
business  man?  Practically,  where  the  income  tax  exists,  thia 
matter  seems  to  occasion  little  difficulty. 

It  has  also  been  suggested  that  it  would  be  a  good  thing 
to  make  people  disclose  their  incomes,  as  it  would  remove 
the  temptation  to  many  to  pretend  to  be  richer  than  they 
are,  and  to  spend  money  which  they  cannot  afford. 

However,  if  it  is  desired  to  avoid  publication  of  incomes, 
and  this  seems  on  the  whole  desirable,  there  would  seem  to 


293 


TAXATfO.V  AS  IT  SHOULD   BE. 


be  no  reason  why  this  should  not  be  done.  Sometimes  it  is 
stated  on  personal  property  blanks  that  the  returns  are  not 
open  to  public  inspection.'  A  similar  arrangement  might  be 
made  with  reference  to  returns  of  income  lax,  and  probably 
a  combination  of  the  self- assessment  plan  and  the  assessment 
by  lax  officials  would  work  best. 

There  are  many  evidences  of  income.  In  cities  the 
rent  which  a  resident  pays  in  certain  streets  usually  bears 
a  given  ratio  to  income.  In  England  the  rent  paid  by  a 
farmer  is  supposed  to  be  twice  his  income.  There  is,  no 
doubt,  a  tolerably  constant  ratio  between  rent  and  income 
of  farmers  in  different  parts  of  the  United  States,  and  if  this 
ratio  is  not  always  the  same,  it  must  be  remembered  that  a 
rough  kind  of  justice  is  the  best  which  can,  in  these  matters, 
be  attained.  If  a  man  owns  the  farm  which  he  is  cultivating, 
this  makes  no  difference,  for  its  annual  rental  value  can  be 
assessed,  and  that  added  to  what  would  be  a  tenant's  income. 

Corporations  can  be  made  to  pay  the  income  tax  on 
all  dividends  and  interests,  also  on  all  salaries.  States 
and  municipalities  can  easily  deduct  the  income  tax  from 
interest  on  all  bonds.  Each  tax-payer  can  then  be  allowed 
to  deduct  the  tax  already  paid.  It  is,  of  course,  necessary 
that  the  blanks  to  be  filled  out,  define  income  accurately. 
It  is  what  one  has  for  expenditure  from  all  sources,  property, 
business,  and  profession.  To  deduct  house  rent  is  absurd. 
Income  is  for  the  purpose  of  paying  rent,  as  it  is  for  defray- 
ing other  expenses.  Where  a  tax-payer  owns  the  house 
which  he  lives  in,  its  annual  rental  value  must  be  regarded  as 
^  part  of  income.  It  is  impossible  to  go  into  details  in  this 
place,  for  space  does  not  admit  of  it.  The  works  referred 
to  in  Fart  I.  will  give  details.  Reports  of  the  English  com- 
'  Id  MissachuaettE,  for  example. 


I 


I 


I 


L 


TAXA  TION   OF  INCOMES. 

missioners  of  internal  revenue  give  full  infonnation  about  the 
English  income  tax.  The  third  volume  of  Dowell's  "  His- 
tory of  Taxation  and  Taxes  in  Kngland "  expl; 
peculiar  features  of  the  English  income  tax  and  presents  a 
sketch  of  its  history. 

If  it  is  decided  not  to  make  the  returns  of  income  public 
as  a  guarantee  to  the  pubhc,  the  Georgia  plan  of  laying 
returns  of  income  tax  before  the  grand  juries  of  each  county 
and  municipality  might  be  adopted,  not  with  any  view  to 
the  institution  of  criminal  proceedings,  but  for  the  purpose 
of  revision. 

Mr.  J.  R.  Lamar,  of  Augusta,  Georgia,  an  excellent  author- 
ity, has  had  the  goodness  to  explain  the  actual  workings  of 
this  feature  of  taxation  in  Georgia  ;  "  The  provision  requiring 
the  tax  digest  to  be  laid  before  the  (Irand  Jury  for  inspec- 
tion is  more  valuable  in  what  it  prevents  being  done  than  in 
what  is  done  by  the  Grand  Jury  itself.  Many  men,  knowing 
that  the  tax  digest  is  to  be  examined  by  the  Jury,  make 
fuller  returns  than  they  otherwise  would,  and  many  a  tax- 
receiver  of  returns  who  would  accept  from  his  friends  and 
allies  a  very  meagre  showing  is  much  stricter  when  he  knows 
his  work  is  to  be  inspected  by  the  grand  jurors  who  are  more 
or  less  familiar  with  the  financial  standing  of  most  lax-payers. 
While  not  frequently  the  case,  there  are  many  instances 
where  they  do  add  to  or  take  from  assessments.  I  know  of 
no  other  stale  having  this  provision  as  to  the  Grand  Jury.  It 
is  not  exhaustive,  nor  a  sufficient  requirement  by  itself,  the 
jurors  generally  having  far  too  short  a  lime  to  be  able  to 
give  it  full  attention.  It  works  well  as  far  as  it  goes,  and  is 
a  good  check  on  officers  who  might  otherwise  favor  their 
friends  and  oppress  their  enemies,"  This  plan  might  be 
extended  or  some  similar  plan  adopted  for  the  control 


J 


300  TAXATION  AS  IT  SHOULD   BE. 

income  Ux  returns.      It  will  not  be   found  difficult  if  an 
honest  effort  is  made  to  provide  satisfactory  guarantees.' 


SUFnCIENCV  OF  A  LOW   INCOME  TAX. 

The  income  tax,  in  my  opinion,  should  be  a  variable  tax 
on  all  incomes  in  excess  of  j6oo,  but  only  on  the  excess  in 
every  case.  The  income  tax  should  be  high  enough  each 
year  to  meet  all  deficiencies  from  other  sources.  I  estimate 
that  in  Mar>'land  it  need  never  exceed  one  per  cent.,  which 
is  hardly  more  than  equal  to  a  tax  of  one-twelfth  of  one  per 
cent,  on  property.  In  the  year  1866  Maryland  paid  to 
the  federal  government  over  ^1,700,000  in  income  tax,  or 
nearly  enough  to  meet  all  the  expenses  of  our  state  govern- 
ment at  present.  Of  this  sum  over  SSoo.ooo  was  the  retiun 
from  the  five  per  cent,  tax,  which  would  be  Si 60,000  for 
each  one  per  cent, ;  but,  as  in  the  arithmetic  of  taxation,  two 
and  two  sometimes  make  only  one,  so  it  may  be  expected 
that  in  the  case  of  an  income  lax,  if  you  reduce  the  rate,  the 
returns  will  not  diminish  in  the  same  proportion.  It  is  then 
safe  to  calculate  that  a  one  per  cent,  tax  on  those  incomes 


)  Hon.  William  A.  Wrighl.  Comptroller-General  of  Georgia,  hni 
kindly  written  mc  a.  leller  on  the  examination  of  tax  relutna,  which 
reacherl  me  some  time  after  1  received  Mr.  Ijiriiar's  leller.  Tbe  follow- 
ing extracl  is  raade  from  Mr.  Wright's  leller;  "The  grand  juries  in 
nitsl  of  the  cuunlics  of  this  slale  bestow  bul  litlle  lime  u|ion  the  eiam- 
inalion  of  their  lax  digests.  The  reason  for  this  is  Lhal  their  lime  is 
enlirely  taken  up  in  olhei  mailers  that  cannot  be  ncglecled.  If  our 
laws  were  so  amended  as  to  permit  Ihc  juries  to  sil  a  tuHiciGnt  time 
after  the  adjottminent  of  the  court  to  invesligale  carefully  the  tax 
letnrns  of  Iheir  counties,  I  am  satisfied  it  wuulti  result  in  bringing  up 
the  value  of  ihe  property  (if  fhe  stale  al  least  fifty  ]iet  cent.  In  many 
of  Ihe  counties  Ihe  work  is  done  very  thoroughly,  and  the  digests  show 
Ihe  c&ect  of  the  work  in  increased  valuatinni," 


I 


TAXA  TION  OF  IMCOMES. 


301 


would  yield  one-third  as  much  as.  a  live  per  cent  tax,  oi  j 

*26  7,000. 

The  sum  of  £987,534.41  was  the  proceeds  of  a  ten  per  \ 
cent,  tax  on  incomes  over  f  5000.    A  one  per  cent,  tax  woi 
prol>ab!y  have  yielded  one-fifth  as  much,  or  about  8195. 500.    ; 
The  two  sums  added  equal  8462,500.     The  S500  was  not 
deducted  in  each  case.      On  the  other  hand,  wealth  and 
population   have   increased,'    and    there    is    not   the   bitter 
opposition  to  the  state  government  which  existed  in  many 
minds  against  the  federal  government.     I  therefore  estimate 
that  a  one  per  cent,  income  tax  at  the  present  time  could 
safely  be  relied  upon  to  yield  ^500,000,  whieh  would  bo    ■ 
ample,  with  other  revenues,  to  meet  the  deficiency  due  lo 
the  exemption  of  real  estate  from  all  state  taxation. 

There  can  be  no  difficulty  in  raising  all  the  money  which 
our  states  need,  by  means  of  an  income  tax,  together  with  , 
all  other  sources  of  revenue  describeil.  The  total  amount 
raised  by  the  federal  income  tax  in  1866  was  j6i, 071.933. 35, 
and  in  1867  it  was  $64,984,437.  The  direct  slate  tax  in 
Massachusetts  yields  less  than  one  and  a  half  millions  of 
dollars;  the  federal  income  tax  in  1867  yielded  88,849,753. 
The  direct  state  tax  in  New  York  during  the  year  ending 
Sept.  30,  1887,  brought  into  the  state  treasury  (5,805,400, 
whereas  the  income  tax  in  1867  yielded  820,107,547. 
Similar  results  may  be  secured  by  comparing  other  states 
which  were  both  in  1867  and  in  1887  in  a  normal  condition. 

'  Populilian  has  Increased  over  oae-lblrd.  and  Ihere  \%  teason  to 
believe  that  the  numbei  of  those  nith  latable  incomes  has  iiicieaseil  in 
like  praportian.  One  of  the  mosl  miumshing  things  >boat  r  city  like 
Baltimore  at  the  present  time  is  the  vnsi  number  uF  families  living  in 
great  comfort.  One  can  walk  ihrimgh  miles  of  streets  on  which  reside 
families  with  incames  vntying  from  %\yx>  to  (10,000  or  more.  Other 
facti  all  point  to  b  large  increase  in  the  number  of  Familiei  with  iu- 
comel  in  excess  of  I600. 


TAXA  riON  AS  IT  SHOULD  BE. 


^ 


St 


l' 


The  total  amount  raised  by  state  taxation  is  about  ^65,1 
000,  according  to  the  American  Almanac,  This  evidently 
includes  more  than  the  direct  state  tax.  Besides,  it  must 
be  rememt)ered  that  the  Southern  states  were  impoverished 
and  made  insignificant  returns  of  income.  Population  and 
wealth  have  increased  enormously  since  1867.  There  is 
much  that  is  illusory  about  the  alleged  prosperity  of  1866 
and  1S67-  Many  were  making  money  rapidly,  but  many 
more  were  suffering  privation.  The  number  who  have  in- 
comes exceeding  J600  must  be  far  greater  than  twenty  ycara 
ago.. 

THE   INCOME  TAXES   IN  AMERICAN   STATES. 

Two  Slates  levy  general  income  taxes  now.  In  Virginia, 
on  income  derived  from  interest  or  profits,  the  amount  in 
excess  of  %  tooo  is  subject  to  a  tax  of  one  per  cent.  The  pro- 
ceeds from  this  tax  amounted  in  1886  to  ^20,755.  In  Mas- 
sachusetts it  is  provided  that  income  from  annuities,  from 
certain  ships  and  vessels,  and  so  much  of  the  income  from 
a  profession  or  trade  or  employment  as  exceeds  the  sum  of 
{2000  shall  be  taxed ;  but  it  is  further  provided  that  no 
income  shall  be  taxed  which  is  derived  from  property  sub- 
ject to  taxation. 

PENNSYLVANIA   LEVIES   AN    INCOME    TAX    ON   SPECIAL    KINDS    OF 


In  Pennsylvania  an  income  tax  of  three  per  cent,  is  levied 
on  the  income  or  net  earnings  of  all  corporations,'  foreign 
insurance    companies,'  and   on   every   private    banker   and 


'  Except  (hose 
'  ForeiRn  ii 


leceived  foe  busincu  ti&nMcled  in  the  st 


IX  on  capLl&l  slock  01  gross 
S  pay  ihree  per    cenl.  1 


TAX^  TION  OF  INCOMES. 


broker,  or  unincorporated  banking  and  savings  institulioA, 
and  express  company.      The  receipts  from  this  sour 
1887  were  /81, 596.92  out  of  a  total  of  ^7, 646,147. 37.' 

The  constitution  of  Nortli  Carolina  forbids  an  income  tax  I 
on  income  derived  from  property  already  taxed.     Charlotte,  ' 
in  that  stale,  levied  a  tax  of  one  per  cent,  on  all  incomeSr  ] 
the  sources  of  which  are  not  already  taxed.     All  this  in 
tax  legislation  is  far  from  what  it  should  be.     Massachusetts 
exempts  $3000  and  income  from  property  already  taxed, 
which  must  make  it  a  farce.     In  no  state  docs  the  income 
tax  occupy  an  essential  position  in  its  scheme  of  taxation; 
and  this  it  must  do  to  fulfil  its  proper  functions  and  to  work  I 
satisfactorily.    All  incomes  above  a  moderate  sum,  like  {600,  I 
must  also  be  taxed  without  exception.     The  moment  exccp-  1 
tions  are  allowed,  the  difficulties  of  administration  are  in-  \ 
creased,  and  the  door  is  opened  for  fraud. 


-SHOUXJ)   BE 


An  income  tax  must  be  assessed  on  all  Income  regardless 
of  source,  even  if  that  source  has  already  been  taxed. 
Taxes  may  be  divided  into  taxes  on  property  or  things 
and  taxes  on  incomes.  A  tax  on  property  is  a  tax  on 
things.  A  piece  of  land  as  such  must  pay  a  certain  tax, — 
a  sort  of  first  claim  on  its  revenues,  regardless  of  ownership 
by  A.,  B.,  or  C.  An  income  tax  is  strictly  a  personal  tax- 
It  asks,  How  much  income  has  this  man?  It  is  regardless 
of  any  particular  source,  hut  includes  all  sources.  Business 
expenditures  and  taxes  are  excluded  from  income,  but  per- 
sonal expenses,  as  for  rent,  food,  clothing,  etc.,  are  included, 

'  Historical  Sketch  of  (he  Finances  of  Peni^ 


•See  Worth  in  gton'i 
•ylvuiia,"  pagei  89,  90, 


TAXATION  AS  IT  SHOULD  BE. 


is  for  these  purposes  that  income  exists.     I 
man  occupies  his  own  home,  its  estim^tted  annual  value  is 
part  of  his  income. 

Propert)'-ownere  are  at  first  inclined  to  object  to  what 
they  call  double  taxation.  They  are  the  last  ones  who 
ought  to  object,  because  the  very  purpose  of  the  income  tax 
is  to  relieve  them.  One  of  the  conditions  of  its  successful 
operation  in  the  taxation  of  all  income,  and  the  one  whose 
income  is  wholly  from  property  will  find  his  tax  reduced, 
because  income  tax  and  properly  tax  together  will  amount 
to  no  more  than  the  property  tax  now.  The  larger  ihe  amount 
raised  by  the  Income  tax,  the  less  the  amount  to  be  raised 
by  a  property  tax.  It  is  also  acknowledged  that  income 
derived  from  a  permanent  source  —  property  —  ought  to  be 
taxed  at  a  higher  rate  than  income  from  a  temporary  and 
precarious  source,  —  one's  personal  knowledge,  skill,  strength, 
—  because  all  of -tlie  former  income  may  be  spent,  while  a 
part  of  the  latter  must  be  saved  for  future  needs  and  con- 
tingencies, A  professional  man  with  an  income  of  S  10,000  a 
year,  and  nothing  else,  must  lay  by  something  for  old  age, 
for  life  insurance,  for  education  of  children,  etc.,  while  the 
initn  with  jio.ooo  a  year  from  United  States  bonds  can  spend 
it  all  and  know  that  in  case  of  death  or  disability  his  income 
continues.  He  can  also  increase  his  income  by  personal 
exertions,  if  he  will.  Now,  account  of  this  difference  is 
taken  in  the  fact  that  provision  is  made  for  the  taxation  of 
projjerty  from  which  income  is  derived.  The  man  who  has 
only  income  cannot  complain,  for  the  man  whose  income  is 
derived  from  property  pays  a  higher  tax.  The  man  of  prop- 
erty is  the  last  one  who  ought  to  complain,  for  his  taxatloD 
is  lessened. 

Let  us  see  how  this  would  alfect  the  farmer. 

Let  us  say  a  man  has  a  farm  worth  ^10,000  in  Maryland. 


TAXA  TlOX   OF  INCOMES. 


If  it  yields  f  1400  a  year,  that  is  doing  well.     If  his  lajces  a 


one  per  cent,,  that  would  be  ? 
would  be  for  stale  purposes. 
away  under  the  scheme  of 
income  tax  of  $8.00  wouid  take 
cent,  on  the  excess  of  income  ov 
save  the  difference  between  <i. 
which  would  be  paid  by  ihi 
V  inadequately 


this 


a  year,  of  which  S1S.75 
is  latter  sum  would  fall 
here  elaborated,  and  an 
:s  place,  for  this  is  one  p» 
r  S600.  The  farmer  would 
75  and  J8.00,  or  J10.75, 
jme  tax  on  those  who  are 
a!!.    The  system  of 


taxation  here  elaborated  might  be  expected  to  reduce  local 
burdens,  and  I  hope,  in  Maryland,  on  an  average  by  about 
one*fifth.     The  farmer  would  then  save  an  addiiional  3i6, 
a  total  of  Safi,  reducing  his  taxation  from  Sioo  per  anni 
to  1 74  per  annum. 

PROCRESStVE  VERSUS    PR0P0R110NAL  TAXATION. 

The  question  of  a  progressive  rate  of  taxation  has  been 
much  discussed.  One  of  the  ablest  arguments  for  a  pro- 
gressive rate  is  thus  stated  by  Montesquieu  in  referring  to  the 
Solonian  taxation  in  Athens ;  "The  tax  was  just,  though  it 
was  not  proportional.  If  it  did  not  follow  the  proportion  of 
goods,  it  did  follow  the  proportion  of  needs.  It  was  judged 
that  each  had  equal  physical  necessities,  and  that  those 
necessities  ought  not  to  be  taxed ;  that  the  useful  came 
next,  and  that  it  ought  to  l>e  taxed,  but  less  than  what  wai 
superfluous ;  and  lastly,  that  the  greatness  of  the  tax  on  the 
superfluity  should  repress  the  superfluity."  ' 

It  might  then  seem  just  to  have  three  rates  of  taxation : 
one  for  incomes,  sufficient  to  furnish  necessities ;  one  for 
those  sufficient  to  provide  the  useful ;  and  one  for  those 
large  enough  to  warrant  luxuries. 

'  From  Walker's  "  PoUtic»l  Economy."  3d  edition,  page  498, 


I 
I 


306 


TAXATION  AS  IT  SHOULD   BE. 


Another  reason  for  a  progressive  rate  of  taxation  is  found 
in  a  principle  thus  slated  by  Prof.  W.  G.  Sumner  i  Taxation 
tends  to  diffuse  itself,  but  on  the  line  of  least  resistance.' 
Now,  the  line  of  least  resistance  is  found  among  the  poor, 
the  line  of  great  resistance  among  the  rich ;  whereas  the 
line  of  moderate  resistance  will  be  found  among  people  in 
moderate  circumstances.  Proportional  taxation  is  always 
found  to  be  regressive  taxation ;  in  other  words,  the  power 
of  resistance  on  the  part  of  wealth  is  so  great  that  it  never 
pays  its  fair  share.  Tax-assessors  fear  to  assess  the  wealthy 
as  they  do  the  poor,  because  the  wealthy  have  great  power 
to  harm  or  help  one.  In  no  place  in  the  United  States  are 
the  wealthy  properly  assessed.  Moreover,  the  various  de- 
vices, like  bond  purchases,  by  which  the  wealthy  escape, 
are  not  practicable  for  meii  of  small  means,  as  they  would 
be  too  expensive.  Again,  those  who  have  large  wealth  are 
better  informed  on  business  methods  and  tax-dodging 
schemes.  This  docs  not  imply  that  any  one  class  is  either 
better  or  worse  than  another.  It  is  a  question  of  the  power 
of  resistance.  The  poor  people  and  the  people  in  moderate 
circumstances  would  often  be  but  too  glad  lo  imitate  conduct 
which  they  condemn,  had  they  the  power.  It  may  be  urged 
that  a  nominally  progressive  tax  would,  after  all,  be  no  more 
than  proportional  in  actual  practice.  Progressive  taxation 
would  be  resisted  so  strongly  that  in  a  country  where  wealth 
is  so  powerful  as  with  us,  it  is  Utopian  to  think  of  it.  It 
would  arouse  animosity  and  bad  feeling  if  attempted,  and  it 
seems  far  better  to  confine  ourselves  to  efforts  to  approxi- 
mate proportionality  as  nearly  as  possible.  We  shall  be  likely 
to  fare  best  under  this  system.     It  appeals  to  the  conscience 

■□m  an  excellent  article  on  "  Recent  Experiments  in  State  Taxa- 
by   Henry  James  Ten    Eyck,  in   Popular  Stienci  MBnIldy  tot 


TAXM  T!ON  OF  INCOMES. 


of  people,  whereas  progressivity  does  not  at  present  appeal] 
A  the  majority  of  our  people  as  just  ajid.l 


L 


fair. 

One  objection  frequently  urged  to  progressivity,  is  that  a 
progressive  rate  of  taxation  will  sooner  or  later  amount  lo 
confiscation  ;  that  if  you  take  one  per  cent.,  say,  on  incomes 
of  Siooo,  two  per  cent,  on  incomes  less  than  <2ooo,  and  con- 
tinue to  increase  the  rate,  you  must  finally  lake  one  hundred 
per  cent,  or  all.  The  fact  that  this  objection  is  so  frequently 
urged  by  political  economists,  does  not  do  credit  to  their 
mathematical  ability.  If  the  rate  of  taxation  increases  only  in 
arithmetical  ratio,  while  the  income  increases  in  geometrical, 
the  rate  may  progress  and  yet  never  be  high.  If  the  rate 
increases  as  i,  i,  3,  4,  5,  and  income  taxed  as  jiooo,  jiooo, 
J4000,  ;(8ooo,  the  rate  would  not  be  fifteen  per  cent,  until 
the  income  exceeded  eight  millions  of  dollars,  and  it  is  safe 
lo  say  that  never  in  the  world's  hbtory  would  it  reach  twenty 
per  cent. 

It  is  frequently  urged  that  the  opposition  to  an  income 
lax  is  so  strong  that  it  is  out  of  the  question  to  talk  about  it. 
This  is  an  unwarranted  assumption.  There  is  a  very  general 
feeling  in  favor  of  it.  I  heard  from  four  professors  of  politi- 
cal economy  about  my  report  as  lax -commissioner,  and 
every  one  expressed  himself  favorably  in  respect  to  the  in- 
come tax.  I  was  invited  to  appear  before  representatives  of 
the  Board  of  Trade,  of  the  Corn  and  Flour  Exchange,  and 
of  the  Merchants  and  Manufacturers'  Association,  of  one  of 
the  largest  cities  in  the  United  States,  to  explain  my  system 
of  taxation,  and  not  one  objected  to  the  income  tax.  One 
prominent  member  said :  "  While  I  am  not  prepared  to 
turn  it  down,  I  want  more  time  to  think  about  it."  Another 
said  :  "  You  know,  gentlemen,  I  never  objected  to  the  federal 
income  tax.     It  always  seemed  to  me  right  that  a  mas 


308  TAXATrOX  AS  IT  SHOULD  BE. 

should  pay  in  proportion  to  his  income."  A  third  prominent 
business  man  came  to  me  at  the  close  of  the  meeting  to  say 
that  he  ihoroughly  indorsed  my  position.  This  personal 
occurrence  is  cilcd  because  it  is  beUeved  to  be  worthy  of 
notice.  For  one  who  has  objected  to  the  income  tax 
feature  of  my  report  to  the  Mar>land  legislature,  nine  have 
expressed  approval  of  it.  V^'hen  tax  reformers  begin  to 
turn  their  attention  to  the  income  lax,  ihey  can  carry  every- 
thing before  them,  and  one-tenth  of  the  effort  which  has 
been  expended  on  personal  property  taxation  would  suffice 
to  build  up  a  satisfactory  machinery  for  assessing  and  collect- 

The  following  is  a  quotation  from  a  letter  frotn  a  county 
court  judge  of  New  York  :  — 

"  I  have  examined  with  much  interest  your  'Supplemental 
Report '  to  the  general  assembly  of  Maryland  on  '  Taxa- 
tion.' I  most  fully  approve  of  the  scheme  recommended 
therein.  The  suggestion  that  real  estate  should  not  be  taxed 
for  state  revenue,  but  for  local  revenue  only,  is  new  to  me. 
On  such  consideration  as  I  have  had  time  to  give  the  ques- 
tion, it  seems  to  me  wise,  and  it  would  obviate  in  a  large 
degree  one  of  the  most  serious  difficulties  we  have  in  secur- 
ing a  just  equalization  of  taxation  upon  real  estate  in  the 
stale  of  New  York. 

"  I  have  been  for  many  years  most  earnestly  in  favor  of  a 
graded  income  tax,  with  a  1(500  exemption.  I  should  not 
object  to  a  i6oo  exemption.  I  also  believe  in  a  graded 
inheritance  tax  on  all  legacies,  devises,  distributive  shares 
and  .successions  exceeding  ^500  ;  also  a  tax  upon  income  of 
corporations,  especially  those  corporations  whose  business 
secures  '  increasing  returns,'  and  with  reference  to  which 
the  laws  of  competition  cannot  have  free  play. 


TAX  A  TrON  OF  INCOMES. 


309  1 


"  All  other  revenues,  it  seems  to  me,  should  be  incidental, 
and  not  laid  with  direct  reference  to  revenue." 

The  following  quotation  from  a  letter,  like  the  previous, 
deals  with  other  parts  of  this  work  as  well  as  the  present 
chapter,  but  it  is  better  to  put  it  in  one  place  than  to 
separate  it  into  parts  according  to  topics.  It  is  of  interest 
on  account  of  the  subject-matter,  and  also  on  account  of 
its  author,  who  now  occupies  a  distingubhed  position,  and 
was  once  a  justice  of  the  supreme  court  of  one  of  our  targei 

"  Accept  my  thanks  for  a  copy  of  your  '  Report  upon 
Taxation."  Some  of  its  suggestions  are  new,  others  have 
been  subjects  of  speculation  with  me  during  my  life.  With 
your  criticism  upon  the  attempt  to  tax  personal  property, 
including  money  and  credits,  I  fully  agree.  It  is  always  a 
failure,  oppressive  to  the  honest,  and  very  seldom  reaching 
the  dishonest.  But  my  mind  is  not  settled  as  to  the  expe- 
diency of  abandoning  it  altogether.  I  also  agree  with  you 
as  to  the  policy  of  taxing  incomes.  It  is  the  fairest  tax  thai 
can  be  devised,  provided  the  amount  of  the  income  can  be 
reached.  Here  is  the  rub,  and  it  seems  to  me  that  you 
hardly  appreciate  the  difficulty.  ...  I  should  like  to  see 
such  a  tax  made  part  of  our  system,  and  I  would  not  object 
to  such  inquisitorial  machinery  as  should  secure  the  truth, 
so  hard  to  be  reached.  And  I  would  make  positive  that 
which  you  only  suggest,  that  is,  1  would  make  the  tax  cumu- 
lative. While  revenue  is  the  object  of  taxation,  still  other 
things  must  be  taken  into  consideration.  All  governmental 
power  should  be  so  exercised  as  to  promote  the  general 
welfare  as  well  as  the  immediate  object  of  the  power.  I 
look  to  the  taxing  power  as  furnishing  the  means  to  partially 
remedy  the  great  evil  of  vast  accumulations  of  property. 
As  it  is,  those  who  thus  accumulate  pay  compaiatirely  ten 


J 


310 


TAXATION  AS  IT  SHOULD  BE. 


taxes  than  their  poor  neighbors.  A  small  tax  may  be,  often 
is,  oppressive  to  the  latler,  while  a  large  one  in  no  way  dis- 
commodes the  fomier.  A  tax  of  Jio.ooo  upon  an  income 
of  j-so.ooo  is  no  burden  whatever  lo  the  tax-payer,  while  it  is 
a  blessing  to  the  community  in  discouraging  such  accumula- 
tions. I  would  assess  the  cumulative  lax  upon  land,  upon 
incomes,  upon  everything  that  is  taxed ;  and  I  would  treat 
everything  made  by  stock- gambling  as  so  much  income. 

"  Have  you  ever  thought  of  the  propriety  of  a  tax  upon 
rents  as  such?  Our  land  titles  are  in  theory  feudal,  in 
England  actually  so.  The  lord  paramount  divides  up  the 
land  among  the  great  lords  upon  condition  of  military  ser- 
vices and  payment  of  dues.  These  lords  divided  it  among 
their  followers  upon  similar  conditions.  This  return  of  ser- 
vices, and  these  payments  were  the  rent,  —  the  reddihis, — 
and  were  the  only  consideration  for  the  land  thus  given 
them.  The  early  stniggles  between  the  king  and  nobles 
pertained  chiefly  to  rent,  the  latter  seeking  to  hold  the  land 
and  get  rid  of  the  rent,  while  the  former  sought  to  increase 
uncertain  burdens.  The  result  has  been,  in  the  develop- 
ment of  the  English  constitution,  that  the  great  holders  hove 
got  rid  of  their  obligations  entirely,  own  the  land  discharged 
of  rent,  while  the  common  people  who  hold  under  them 
have  had  their  rent  doubled,  quadrupled,  and  more.  As 
knight  service  and  other  dues  can  no  longer  be  rendered 
and  paid,  in  order  to  cany  out  the  spirit  of  the  original  gift, 
every  great  landlord  should  pay  into  the  king's  treasury  one- 
fourth  to  one-half  of  al!  the  rent  he  collects.  That  would 
be  his  feudal  due,  for  tliat  which  he  holds  free  from  the  dues 
he  contracted  to  pay.  'llie  same  historical  reasons  do  not 
exist  with  us,  but  the  state  is  the  lord  paramount,  owns  the 
allodium  of  all  lands,  and  has  a  claim  upon  the  soil  over  and 
above  the  right  to  tax  all  property.     I  can  now  only  hint  al 


TAXATION   OF  INCOMES.  311 

tte  matter,  but  it  seems  to  me  that  there  is  a  reason  for 
taxing  rents,  incomes  from  land  not  depending  upon  the 
labor  of  the  owner,  not  applying  to  personal  property  or  to 
income  derived  from  labor  or  business. 

"  All  public  works  in  which  the  people  are  all  interested 
should  be  owned  by  the  state,  the  United  States,  or  the 
municipality.     Much  could  be  said  upon  this. 

"  Vou  present  strong  reasons  for  separating  the  state  from 
local  revenue,  and  in  some  states  it  can  be  done.  If  in- 
e  taxed,  it  perhaps  can  be  in  all.  There  is  certainly 
great  injustice  done  by  unequal  valuations  of  the  same  lusd 
of  property." 


CHAPTER   VIII. 


TAXATION   OF   INHERITANCES   AND   BEQUESTS. 

INHERITANCES  will  be  used  in  this  chapter  to  jlenote 
property  which  comes  to  one  from  the  estates  of  de- 
cedents by  course  of  law,  without  a  wii!  by  former  owner. 
Property  of  any  kind  which  comes  to  one  by  last  will  or 
testament,  or  by  gift  to  take  effect  after  the  death  of  the 
giver,  will  be  denoted  by  the  word  bequest.  Bequest  has 
reference  to  testates  and  to  testate  estates ;  inheritance,  to 
intestate  estates  and  to  intestates.  This  is  a  distinction  by 
no  means  universally  observed,  but  precedent  is  found  for  it 
in  John  Stuart  Mill's  treatise  on  "  Political  Economy,"  •  and 
it  is  a  convenient  distinction  for  present  purposes. 

"The  institution  of  property,"  says  Mill,  "when  limited 
to  its  essential  elements,  consists  in  the  recognition  in  each 
person  of  a  right  to  the  exclusive  disposal  of  what  he  or  she 
baa  produced  by  his  or  her  own  exertions,  or  received,  either 
by  gift  or  fair  agreement,  without  force  or  fraud,  from  those 
who  produced  it-  The  foundation  of  the  whole  is  the  right 
of  producers  to  what  they  themselves  have  produced." '  This 
includes  the  right  of  bequest,  but  not  the  right  of  inheritance. 
What  right  have  I  to  property  which  another  produced  and 
which  he  did  not  leave  to  me  by  will?  I  have  only  such 
legal  rights  as  the  law  gives  me.  I  have  no  moral  rights 
exceeding  those  which  the  law  may  give  me,  unless  I  had 

>  Book  II..  Chapler  II. 

*  Mill,  Book  II.,  Chapter  II.,  5  I.  All  refeceoces  are  to  the  ana. 
bridged  editian. 


INHERITANCE  AND  BEQUESTS.  313 

some  moral  claims  upon  the  owner  of  the  property  while  he 
was  still  aiive.  A  wife  has  both  a  legal  and  a  moral  claim, 
and  so  has  a  minor  child.  A  child  who  has  attained  his 
majority  has  no  necessary  legal  claim,  wherever  the  law  allows 
a  parent  to  will  his  property  away  from  his  children.  If  that 
law  which  prevails  in  America  is  not  in  accord  with  the  re- 
quirements of  ethics,  then  a  child  after  attaining  his  majority 
has  an  ethical  claim.  Part  of  the  property  of  a  husband 
must  go  to  the  wife,  by  the  law  of  American  states,  and  part 
of  it  must,  in  most  countries,  go  to  children.  The  law 
nowhere  compels  a  man  to  leave  part  of  his  property  to 
collateral  relatives,  and  they  can  have  a  claim  only  when 
property  is  bequeathed  to  them,  or  when  in  absence  of  a  will 
the  law  gives  it  to  them.  What  moral  claim  has  a  collateral 
relative  in  absence  of  any  will?  There  may  be  some  ethical 
obligation  on  the  part  of  an  owner  of  property  to  assist  near 
relatives,  not  in  direct  line  of  ascent  or  descent,  although  it 
is  not  usually  recognized.  It  is  in  rare  cases  that  it  extends 
even  to  great-uncles  and  great-aunts  and  second  cousins. 
Yet  it  sometimes  does  extend  so  far,  and  a  person  often  has 
a  real  interest  in  a  father's  or  a  mother's  aunt  or  uncle  or 
first  cousin.  No  more  distant  relative  can,  in  our  days,  when 
families  are  scattered  and  ties  of  distant  relationship  amount 
to  nothing,  institute  any  ethical  claim  to  the  estate  of  an 
intestate  decedent,  A  third  cousin,  living  in  a  foreign 
country  or  even  in  a  distant  part  of  the  same  country, 
has  less  moral  right  to  the  property  of  a  decedent  than  the 
members  of  a  community  among  whom  he  acquired  it,  and 
whose  diligence,  whose  co-operation,  and  whose  observance 
of  law  and  order  made  its  accumulation  possible.  No 
purpose  is  subserved  by  allowing  distant  relatives  to  share 
an  intestate  estate.     It  often  results  in  disgusting  squabbles 


314  TAXATION  AS  IT  SHOULD  BE. 

and  costly  litigatioD,    and  in    the  end  simply  gives  a  few 
privileged  persons  a  chance  to  lead  an  idle  and  useless  life. 

It  is  therefore  desirable  to  abolish  altogether  the  legal  right 
to  inheritance  of  any  collateral  relative  beyond  great-uncle 
or  aunt,  great-nephew  or  niece,  or  second  cousins.  When  a 
person  desires  that  any  more  distant  relative  should  enjoy 
part  of  his  property  he  should  make  provision  therefor  by 
bequest. 

The  question  may  also  be  raised,  What  right  has  a  n 
say  what  shall  be  done  with  this  earth,  or  anything  which 
pertains  to  it.  after  he  is  dead?  Surely  the  earth  belongs  to 
the  living,  and  not  to  the  dead.  A  man's  wishes  respecting 
his.  wife  are  of  no  validity  after  his  death.  She  is  free  from 
his  law  then.  He  may  desire  her  to  remain  a  widow,  but  the 
law  gives  no  effect  to  his  wishes.  His  control  over  bis 
children  is  also  very  limited.  There  has,  however,  been  a 
tendency  to  forget  that  private  property  exists  for  man.  and 
not  man  for  private  property ;  and  to  regard  a  man's  wishes 
respecting  property  which  he  once  owned,  as  sacred,  even 
after  death.  It  is  granting  a  great  deal  to  allow  any  individ- 
ual to  fence  in  a  portion  of  the  earth's  surface,  and  during  his 
lifetime  to  say  :  "This  is  mine  ;  1  shall  do  as  I  please  with  it 
No  one  else  shall,  unless  I  will,  derive  any  benefit  there- 
from." It  has,  however,  been  found  expedient  to  grant  this 
right.  What,  however,  shall  be  said  of  those  who  go  further 
■than  this,  and  give  to  me  the  right  to  say,  for  all  time,  what 
use  shall  Iw  made  of  a  portion  of  the  earth's  surface,  because 
I  once  owned  it?  This  is  absurd,  and  such  an  undue  exten- 
sion of  the  right  of  private  property  endangers  ihe  entire 
institution,  giving  a  handle  to  those  who  would  overthrow  it. 

I  cannot  grant  that  the  dead  have  any  ]»roprietary  rights 
whatsoever.  The  living  have  rights.  Not  the  dead  man  has 
rights ;  but  his  wife,  his  children,  his  relatives,  and  the  con» 


INHERITANCE   AND   BEQUESTS. 


munity.  Nowhere  may  a  man  say  absolutely  what  shall 
become  of  his  properly.  His  wife  has  claims  which  he  can- 
not disregard.  In  France,  his  children  may  claim  the  whole 
of  it  save  what  would  be  equal  to  the  share  of  one  child. 
The  right  of  bequest  has  for  many  ages  in  many  parts  of  the 
world  never  existed  at  all.  A  liberal  right  of  bequest  has 
been  granted  in  recent  times,  but  the  only  reason  therefor 
is  public  expediency.    This  right  must  be  limited. 

It  follows  from  this  that  the  right  of  inheritance  should  be 
extended  in  some  instances  and  abridged  in  others.  The 
law  in  American  states  does  not  recognise  sufficiently  the 
moral  claim  which  a  man's  children  have  upon  his  prop- 
erty, a  claim  founded  in  the  fact  that  he  has  called  them 
into  being  and  ought  therefore  to  put  them  in  a  position 
to  lead  a  happy  and  useful  life.  This  would  not  necessarily 
cany  with  it  the  right  to  inherit  millions,  least  of  all  in  the 
absence  of  a  will,  bvit  of  enough  to  give  one  a  reasonable 
prospect  of  a  happy,  useful,  and  successful  life,  and  this 
amount  would  vary  with  one's  rank  and  station  in  life. 

It  may  further  be  said  that  those  who  receive  property  by 
inheritance  or  bequest  require  in  special  degree  the  3.ssist- 
ance  and  protection  of  government ;  that  the  orderly  di 
lutioD  of  property  in  consequence  of  a  death  is  impossible 
in  the  absence  of  a  government  which  maintains  law  and 
order. 

Inherited  money  is  an  income  without  labor  on  the  part 
of  the  receiver,  and  may  properly  be  made  liable  to  a  tax 
even  in  excess  of  the  ordinary  income  tax.  It  is  i 
which  can  be  collected  easily,  and  this  is  one  reason  for 
such  a  tax. 

It  is  in  consequence  of  these,  and  other  reasons,  that 
taxes  have  been  laid  on  inheritances  and  bequests,  and  it 
is  proper  that  collateral  inheritances  should  be  taxed  at  a 


Tax  Commission  of  i88 

"The  real  estate,  person 
public  and  private  sect 
from  an  owner  dying,  seize 
to  take  effect  in  possessio 
to  any  person  or  corporal 
to  or  in  trast  for  use  of 
children,  and  lineaJ  descem 
ject  to  a  tax  of  (wo  and  ona 
the  clear  value  of  such  estati 
(500  value  shall  be  subject  u 

"  When  property  liable  to 
real  estate,  liie  lax  thereon 
value,  and  the  executor  or  ai 
s«ll  the  same  under  the  on 
pay  such  lax.' 

"  When  real  estate  is  subjt 
appointed  to  appraise  the  pt 
to  value  all  the  real  estate  of 
this  tax  shall  be  paid  upon  s 

"  Such  lax  shall  be  a  lien  1 
dent  from  the  lime  of  his  de 


INHERITANCE  AND  BEQUESTS 


317 


^! 


"Whenever  any  estate,  real,   personal,  or  mixed,  of  a 

decedent  shall  be  subject  to  this  tax,  and  a  life-estate  or 

n  of  years,  etc.,  is  given  to  one  party,  and  the  remainder 

or  reversion  to  another,  the  oqihans'   court  to  determine 

I  what  pordon  of  the  tax  the  respective  parties  in  interest 

I  shall  pay." ' 

New  York  and  Pennsylvania  have  a  five  per  cent,  tax  on 
collateral  inheritances. 

Maryland  has  a  tax  which  in  its  practical  ofKradoos 
amounts  to  a  tax  on  direct  inheritances.  It  is  a  tax  of  one- 
tenth  of  all  commissions  allowed  executors  and  administra- 
tors ;  and  legacies,  left  executors  by  way  of  compensation,  are 
to  be  reckoned  in  the  commissions.  Executors  of  non-resi- 
dents owning  any  state  or  city  stock,  or  stock  of  any  corpo- 
ration, are  liable  to  the  tax  Just  as  domestic  executors  are. 
This  tax  yielded  in  1887  <5o,854.47,  whereas  the  collateral 
inheritance  tax  in  that  year  yielded  only  ^45,597. 14. 

It  seems  to  me  that  a  distincii  on  should  be  made  between 

large  and  small  collateral  inheritances.     The  Maryland  tax  is 

sufficient  on  small  estates,  but  on  estates  exceeding  $20,000 

1  value  the  New  York  anU  Pennsylvania  rate   is  not  too 

high.     It  might  be  proper  to  raise  the  rate  of  the  tax  to  ten 

per  cent,  on  estates  in  excess  of  $50,000.     This  tax  should 

I  be  laid  on  all  collateral  inheritances  and  bequests ;  but  the 

I  right  of  distant  relatives  to  receive  intestate  estates  should, 

as  already  slated,  be  abolished  altogether,  and  these  then 

allowed  to  fall  to  the  state  by  escheat. 

A  direct  inheritance  lax  is  generally  regarded  as  a  proper 

accompaniment  of  an  income  tax ;  and  when  moderate  in 

amount  is  a  just  tax,  which  can  always  be  assessed  fairly, 

and  collected  without  difficulty  or  considerable  expense. 

1^^      As  the  income  tax  contemplates  an  exemption  of  {600, 

^^  A.  A,.  18S0,  cliaplet  455. 


318  TAXATION  AS  IT  SHOULD   BE. 

it  is  proper  that  the  direct  inheritance  tax  should  exempt 
a  sum,  which,  at  five  per  cent,  interest,  will  produce  f  600, 
or  ^12,000.  In  my  report  to  the  Maryland  legislat 
recommend,  therefore,  that  all  direct  inheritances  exceeding 
jtiijOoo  be  taxed  on  the  excess  of  the  inheritance  over  said 
sum  at  the  uniform  rate  of  one  per  cent. 

Although  I  am  not  prepared  to  recommend  it  at  present, 
it  would  be  in  accord  with  the  principles  of  JefTersonian 
democracy,  and  also  with  the  teachings  of  some  of  the  best 
modern  thinkers  on  economic  and  social  topics,  to  grade 
the  tax,  making  it  two  per  cent,  on  estates  from  tioo,ooo 
to  J30o,ooo ;  three  [ler  cent,  on  estates  from  $200,000 
to  1400,000 ;  four  per  cent,  on  estates  from  ^400,000  to 
f 800,000;  five  per  cent,  on  estates  from  2Soo,ooo  to 
f  1,600,000;  and  so  on,  the  tax  reaching  ten  per  cent,  in 
case  of  estates  of  {50,000,000,  and  the  progression  termi- 
nating therewith.  It  would  seem  desirable  that  the  higher 
rates  should  in  each  case  be  charged  only  on  the  excess 
above  the  sum  taxed  at  the  lower  rate.  Thus,  if  the  tax  is 
two  per  cent,  on  estates  from  ?ioo,ooo  to  Jaoo.ooo,  and 
three  per  cent,  on  estates  from  6200,000  to  ^1400,000,  the 
three  per  cent,  should  be  charged  only  on  5200,000,  while 
f  100,000  should  be  taxed  two  per  cent.,  and  J88,ooo  one 
per  cent. 

This  tax  could  embarrass  no  one,  being  only  $to  on 
{tooo,  and  in  case  of  an  estate  of  ?io,ooo,  equalling  only 
$80,  as  only  S8000  of  the  excess  over  Ji2,ooo  would  be 
taxed.  It  answers  the  requirements  of  every  canon  of  taxa- 
tion. 

One  of  the  principles  which  controlled  the  action  of  Jef- 
ferson and  other  founders  of  this  republic,  was  the  abolition  ' 
of  hereditary  distinctions  and  privileges,  and  their  aim  1 
to  force  each  one  to  rely  on  his  own  exertions  for  his  own  \ 


JNHERfTA.VCE  A.VD   BEQUESTS. 


£irtune,  desiring  to  give  to  all  as  nearly  as  practicable  an 
equal  sLut  in  the  race  of  life. 

It  has  also  been  urged  by  others  that  one  of  the  most 
dangerous  tendencies  of  our  times  b  the  increasing  aggre- 
gation of  wealth  in  a  few  hands.     This  scheme  is  a  slight 
corrective,   which    is    in   harmony   with    the   spirit   of 
instituiiotis. 

Other  far  more  radical  measures  have  been  proposed  Iqr 
conservative  men.  A  committee  of  the  Illinois  Rar  Associ- 
ation recently  reported  favorably '  on  a  proposition  to  limit 
absolutely  the  amount  any  one  child  may  inherit  to  <500,ooo, 
and  the  amount  any  one  else  may  inherit  from  a  single 
estate,  to  Sioo.ooo.  In  their  report  they  say;  "There 
never  was  a  time  in  the  history  of  the  world  when  the  power 
of  money  in  skilful  hands  was  so  great  as  the  present ;  or 
when  the  use  of  that  power  was  made  so  conspicuous.  The 
new  forces  at  its  command  are  augmenting  it  with  wonderful 
rapidity.  Already  the  sceptre  has  passed  from  the  sword 
to  the  counting-house,  TTie  fact  that  one  individual  may 
monopolize  hundreds  of  millions  of  the  wealth  of  the  nation 
and  pass  it  at  last  by  will  to  another,  with  all  its  possibilities, 
is  a  growing  source  of  uneasiness  among  all  classes  of 
society."  I  will  express  no  opinion  on  this  quotati 
simply  remark  that  rightly  or  wrongly,  it  was  precisely  thia 
sort  of  thing  which  the  founders  of  our  republic  tried 
prevent  in  America.' 

With  the  inheritance  tax  it  is  proper  to  connect 
for  the  better  control  of  income  tax  reiums.     A  suitabi 
provision  is  a  law  laying  a  penalty  on  the  estates  of  dec6-' 

>  January.  1S86. 

*  The  timitalioa  of  the  right  of  persons  lo  dispose  of  ptopecty  bf  ^ 
will,  ii  ably  ailvocated  by  Judge  E.  A.  Thumas,  of  Pennj>ylvaiiiii,  in  tl 
t'emm  for  December,  lSS& 


I 

I 


320  TAXATION  AS  IT  SHOULD  BE. 

dents  who  have  manifestly  made  false  returns,  equal  to  five 
times  the  estimated  amount  of  income  tax  fraudulently 
withheld  at  the  time  of  the  last  payment  of  the  income  tax,' 

'  The  tpednl  student  will  do  well  to  read  on  thii  topic,  in  addiliun 
to  the  lileiatuie  mentioned  in  Part  1,,  Judge  Thomm'  arlicie  "  Abuut 
Wilis  and  Tralamenls,"  in  the  Forum  for  UeccEnber,  ^SSi,;  Mill's 
"Political  Economy,"  unabridged  edition,  Book  II,,  Chnpler  II. j 
"  Eilnchalij-stEuer  und  Erbichafts-iertirm,"  by  Professor  too  Schecl, 
Jenn,  1S77;  and  Jocobson's-'HigheiGroutid," Chicago,  18S8.  Part  IV. 
contains  ibe  New  York  law  Tor  the  taxation  of  calUteral  inheritancn, 
the  report  of  the  law  reform  commillee  of  the  Illinois  Bar  Auocjalion, 
on  "  Refonn  in  the  Statutes  of  Descent  and  Wills,  so  as  to  inaure  a 
more  General  Division  of  Property  among  the  People,"  and  the  biil  of 
this  commiitee  which  was  introduced  in  the  Illinois  Icgiilatare.  The 
legislature  b  competent  to  decide  what  use  shall  be  made  of  the  pro- 
ceeds of  the  lax  on  bequests  and  inheritances.  It  may  be  oied  for 
general  or  special  purposes.  It  might  be  well  to  set  it  apart  for  some 
•uch  purpose  as  the  improvement  of  public  schools,  and  perhaps  also 
of  public  highways,  both  of  which  are  in  abominable  condition  in 
nearly  all  rural  districts  in  the  United  Slates.  Schools  and  llrect*  in 
cities  also  stand  in  need  of  impiovemeiit. 


CHAPTER   IX. 


BUSINESS   TAX. 

BUSINESS  should  as  a  rule  be  left  as  free  in  its  movW, 
menis  as  possible,  and  in  view  of  sharp  interstate  com- 
petition, the  burden  of  taxation  should  be  made  as  light  ai 
possible.  Our  commurce  and  our  manufactures  should  be 
fostered,  and  on  account  of  exemptions  in  rival  ports,  ou* 
shipping  deserves  special  consideration,  for  it  will  leave  ud 
otherwise.  Registered  vessels  engaged  in  foreign  trade 
might,  it  would  seem,  with  propriety  be  exempt  from  aO 
taxation  on  their  value,  and  be  taxed  only  on  earnings,  as  is 
the  case  with  this  shipping  in  Rhode  Island  and  New  York, 
and  as  was  recommended  in  Connecticut  by  the  tax  com- 
mission's report  of  1887.  Vessels  engaged  in  coastwise 
trade  appear  to  require  less  aid,  as  they  are  not  subjected  to 
foreign  competition,  but  care  should  be  taken  not  to  burden 
them  too  heavily.  Perhaps  some  plan  for  taxing  them  on 
earnings  might  also  be  devised.  It  is  to  be  observed  that 
in  New  York  City  and  elsewhere,  although  the  laws  impose 
taxation  upon  business,  the  actual  practice  does  not. 

The  last  message  of  Hon.  A.  S.  Hewitt  to  the  New  Yo* 
city  council,  dated  Jan.  ro,  iS38,  deals  with  the  subjects  of 
taxation,  and  is  important  for  us  in  three  respects.  First, 
it  reiterates  what  has  been  said  about  the  injustice  of  our 
system  of  taxation.  "  The  estates  of  widows  and  orphans 
and  wards  in  chancery  pay  the  full  amount  of  taxation  re- 
quired by  taw,  although  in  most  cases  it  can  be  least  afibrdeti^' 


'•km 


322  TAXATION  AS  IT  SHOULD  BE. 

while  '  bloated  '  capitalists  either  entirely  escape  taxation  or 
compromise  for  a  very  inadequate  sum.  This  condition  of 
affairs  is  scandalous,"  Second,  it  advocates  exemption  of 
personalty  in  order  to  build  up  the  business  of  New  York, 
It  says :  "  We  are  now  the  centre  of  exchanges  in  the 
Western  Continent,  but  in  a  few  years  we  should  be  the 
clearing  house  for  the  commerce  of  the  globe."  Business 
men  of  Maryland  and  other  states  should  understand  that 
there  is  a  deliberate  attempt  to  draw  business  to  New  York 
by  low  taxation.  Third,  it  is  plainly  stated  that  all  attempts 
to  enforce  the  system  thoroughly  in  New  York  have  been 
practically  abandoned,  all  law  to  the  contrary  notwithstand- 
ing. In  speaking  of  complaints  about  inadequate  assess- 
ments of  personal  properly  which  were  made  with  full  knowl- 
edge of  their  inadequacy,  Mr.  Hewitt  says;  "Under  ordi- 
nary circumstances  it  would  have  been  my  duty,  on  being 
satisfied  of  these  facts,  to  have  removed  the  commissioners 
complained  of  from  office.  But  I  could  not  shut  my  eyes 
to  the  fact  that  the  existing  laws  had  never  been  executed, 
and  there  was  no  difference  of  opinion  among  those  who  had 
studied  the  question,  that  they  never  can  be  executed  as 
they  stand  in  this  city," 

Our  business  men  in  Baltimore  must  compete  with  mer- 
chants in  adjoining  states  even  for  retail  trade.  The  value 
of  real  estate  depends  upon  the  condition  of  business,  and 
unless  business  flourishes  the  laboring  population  cannot 
find  employment.' 

The  city  of  Montreal  lays  a  tax  on  business,  which  is  a 
percentage  on  rent,  and  it  works  very  satisfactorily.  The 
percentage  is  seven  and  one-half,  and  merchandise  is  ex- 
empt.    Intangible  personal  property  is  also  exempt,  and  the 

'  "The  trade  of  >  district  may  be  seiiausly  imperitled  if  il  has  la 
beti  dlqiroportional  rates."  —  fawii/l. 


BUS/.VICSS    TAX. 

system  seems  to  give  very  general  satisfaction.  Real  estate 
owners  do  not  complain,  because  they  realize  that  it  helpK 
to  bring  business  to  the  city,  and  that  that  raises  [he  value 
of  their  property. 

A  tax  of  ten  per  cent,  might  advantageously  be  laid  on  the 
annual  rental  value  of  all  stores,  offices,  manufacturing  estab- 
lishments, and  other  places  of  business ;  and  merchandise, 
plant,  and  furniture  of  these  places,  be  relieved  of  alt  other 
taxation.  This  tax,  imposed  by  general  law,  could  be 
advantageously  left  to  the  local  political  units  to  be  used  for 
local  purposes.  Should  the  needs  of  the  state  require  it, 
however,  the  local  political  units  might  be  required  to  turn 
over  to  the  state  treasury  part  of  the  revenue  therefrom. 


CHAPTER   X. 


Taxation  of  railroads  operated  by  steam, 
and  other  corporations. 


RAILROAUS. 

A  DISTINCTION  should  be  made  in  any  rational 
scheme  of  taxation  between  taxes  on  corporations 
engaged  in  agriculture,  manufactures,  and  commerce,  and 
those  which  enjoy  natural  monopolies.  The  latter  are  ^uaH 
public  in  nature.  There  is  no  reason  why  ordinary  business 
corporations  should  be  taxed  differently  from  individual  or 
partnership  business.  Both  can  be  taxed  on  the  rental 
value  of  their  places  of  business. 

It  is  advantageous  in  taxing  corporations  of  a  quasi  pub- 
lic nature  to  tax  them  in  proportion  to  gross  revenues,  as 
steam  railroads  are  taxed  in  Wisconsin,  Maryland,  Vermont, 
and  elsewhere.  It  is  never  desirable  to  tax  any  corporation 
on  net  revenues,  as  it  leads  to  fraud.  Railroads  in  some 
stales  are  required  by  charter  to  lower  charges  when  div- 
idends exceed  a  certain  per  cent.,  but  I  believe  no  case  is  on 
record  where  this  per  cent,  has  been  reached.  Stock  is 
watered,  bonded  debts  createil,  combinations  made,  and 
high  salaries  paid,  and  thus  apparent  net  revenues  kept 
down.  It  sometimes  happens  thai  the  officers  of  corpora- 
lions,  ordinary  corporations  as  well  as  others,  get  control 
of  the  corporation  and  divide  nearly  all  profits  among  them- 
selves. A  tax  official  of  one  city  told  me  of  a  corporation 
whose  president,  secretary,  and  treasurer  divided  all  profits, 


TAXING   CORPORATIONS. 


f  profita  ^H 
a  salai;  ^H 

s  simple   ^H 


in  the  shape  of  salaries  among  themselves ;  so  if  profita 
amounted  to  ^40,000,  the  president  would  receive  a  salai; 
of  ?2o,ooo,  the  secretary  one  of  jio.ooo,  and  thi 
one  of  $10,000.  The  taxation  of  gross  revenues  is  simple 
and  easy,  and  amounts  to  a  tax  on  the  value  of  the  property. 
A  case  lik.e  this  has  come  to  my  notice.  A  street  railroad  is 
bonded  for  3  sum  equal  to  all  the  capital  invested.  The 
share  capital  represents  no  actual  investment  at  all.  Inter- 
est b  paid  on  bonds,  all  the  capital  invested  ;  yet  because 
there  is  no  surplus  for  dividends  on  shares,  the  officers  of 
the  corporation  insist  that  there  are  no  prolits  !  It  should 
be  remembered  thai  stocks  and  bonds  added  together  repre- 
sent the  actual  investments.  The  percentage  of  tax  on 
gross  revenues  should  be  high  enough  to  tax  all  the  prop- 
erty invested  properly,  and  the  stocks  and  bonds  should  be 
exempted  from  taxation.  As  real  estate  can  best  be  treated 
by  local  authorities,  so  state  officials  can  best  deal  with  cor- 
porations like  railroads  operated  by  steam,  telegraphs,  tele- 
phones, sleeping-car  and  express  companies,  and  these  ought 
to  be  handed  over  to  the  state  to  be  taxed,  for 
poses  only.  This  would  simplify  administration  wonderfully 
and  put  an  end  to  a  vast  amount  of  litigation  and  corruptioa. 

The  Wisconsin  method  of  taxing  railroads  has  been 
described  in  a  previous  chapter.  The  recommendati 
the  Maryland  Tax  Commission  are  that,  in  addition 
regular  state  and  county  taxes,  railroads  pay  a  special  license 
tax  as  follows  ;  — 

"  The  license  rates  which  we  suggest  are  one  fter  cent.  00 
the  first  ;Stooo  a  mile  of  gross  earnings,  or  on  the  total  earn- 
ings, if  they  are  less  than  Si 000  a  mile.  Two  per  cent. 
on  the  first  ?iooo  or  part  thereof  above  ^1000  per  mile. 
Three  per  cent,  on  the  first  $1000  or  part  thereof  above 
£jooo  per  mile.     Four  per  cent,  on  the  first  $500  or  part 


326 


TAXATION  AS  IT  SHOULD   BE. 


and   five  per  cent. 


ihereof  above  $3000  per  mile ; 
gross  earnings  in  excess  of  JjstM 

Tlie  report  then  continues  as  follows  :  — 

'■  The  reasons  for  increasing  the  per  cent,  as  the  earnings 
per  mile  are  greater  is,  that  with  the  increase  of  gross  earn- 
ings per  mile,  the  proportion  of  the  net  profits  of  the  roads 
increases  very  rapidly;  that  is,  as  the  business  of  a  road 
ases,  its  net  profits  increase  much  more  rapidly  than  its 
operating  expenses,  because  the  heaviest  expenses  of  the 
road  are  those  which  must  be  paid  whether  the  business  is 
great  or  small.  The  increase  of  such  expenses  is  compara- 
tively slight  when  the  business  increa.ses. 

"  The  rates  we  propose  are  suggested  after  a  comparison 
of  the  gross  earnings  of  railroad  companies  in  Maryland 
with  their  net  earnings.  We  believe  they  will  require  that 
the  companies  pay  about  their  fair  contributions  to  the  pub- 
lic treasury,  and  we  are  convinced  they  will  not  be  unduly 
burdensome  to  the  companies." 

The  Vermont,  ^Visconsin,  and  Mississippi  plan  of  taxing 
gross  revenues  only,  and  by  state  authority,  seems  to  me  pref- 
erable. If  the  percentage  of  gross  revenues  just  given  is 
not  sulHcient  to  compel  the  railroads  to  pay  their  fair  share 
of  the  taxes,  it  can  easily  be  raised. 

The  taxation  of  railroads  in  Vermont  and  Mississippi  is 
described  in  these  words  in  the  "  Maryland  Tax  Commission 
Report "  :  — 

"  The  present  statute  of  the  state  of  Vermont,  which  has 
been  in  force  since  188a,  is  growing  in  favor,  and,  although 
its  railroads  have  less  ofiportunity  for  large  business  and 
handsome  profits  than  the  more  flourishing  of  our  roads,  the 
tax  imposed  is  somewhat  higher  than  we  suggest,  being  two 
per  cent,  on  the  first  Siooo  a  mile,  three  per  cent,  on  the 
third  Jiooo,  four  per  cent,  on  the  first  Jiooo  above  ^3000 


r 

^K  per  m 

^H  a  mile 

H  "Tl 

^"  corpol 


TAXING   CORPORATIONS. 


327 


per  mile,  aad  Ave  per  cent  on  all  earnings  above  {4000 

mile. 
The  revenues  derived  by  Vermont  from  its  taxes  on 
corporation  franchises  and  privileges  are,  and  have  been  for 
years,  snflicient  to  meet  all  expenses  of  the  state  govern- 
ment ;  and  no  slate  tax  is  imposed  upon  property,  thus 
leaving  to  the  counties  and  other  local  bodies  all  revenue 
from  that  source.' 

"  In  Mississippi  a  license-privilege  tax  is  imposed  by  the 
state  on  all  railroads.  The  statute  fixes  the  sum  per  mile 
required  of  each  road,  which  varies  from  twenty-five  dollars 
per  mile  on  the  Mobile  and  Northwestern  Railroad  Com- 
pany, to  one  hundred  and  twenty-five  dollars  per  mile  on 
the  Mobile  and  Ohio  atid  other  companies.  The  license  tax 
imposed  by  the  .'\ct  of  1884,  was  increased  twenty-five  per 
cent,  by  the  Act  of  1886.  This  tax  is  in  lieu  of  all  state 
and  county  taxes,  and  two-thirds  of  the  receipts  are  distrib- 
uted to  the  respective  counties  through  which  the  several 
roads  nin,  in  proportion  lo  the  number  of  miles  of  road  in 
each  county ;  but  cities  and  incorporated  towns  may  impose 
the  same  rate  of  tax  on  railroad  property  within  their 
limits  as  is  levied  upon  all  other  property  for  municipal 
purposes. 

"Hon.  George  M.  Govan,  secretary  of  state  of  Mississippi, 
says,  in  response  to  an  inquiry  from  this  commission  :  '  The 
raitrdad  tax  works  well ;  it  brings  a  good  income  into  the 
state.  Of  course  the  railroad  companies  object  to  it,  but 
they  pay  it  promptly.'  " 

The  tax  varies  from  time  to  time.  The  general  assembly 
fixes  a  rate  per  mile  which  it  thinks  the  railroads  ought  to 
pay.     It  is  manifestly  belter  to  have  a  mi 


'  Report  uf  Illini 


iRcve 


I,  page  ■• 


'  igg6 


328 


TAXATION  AS  IT  SHOULD   BE. 


like  a  percentage  on  gross  revenues,  which  will  itself  vary 
according  to  the  prosperity  of  the  railroad. 

The  recommendation  of  the  Maryland  commission  for  the 
taxation  of  certain  other  corporations  is  as  follows:  — 


"  CORPORATIONS. 


"  After 
corporations 


ifu]  consideraiion  of  the  subject  of  taxation  of 
!  have  come  to  the  conclusion  that  the  most 
practical  system  under  our  existing  constitution,  as  well  as 
the  most  practical,  in  view  of  our  circumstances  and  envi- 
ronments, is  that  in  operation  in  Pennsylvania,  called  in  their 
financial  reports  the  tax  on  capital  stock,  coupled  with  a 
gross  receipts  tax  on  those  corporations  which  enjoy  special 
privilege^  under  the  franchises  held  fty  them  through  grant 
by  the  state,  or  which  they  are  permitted  to  exercise  by 
sufferance  of  the  state,  as  in  the  case  of  corporations  of 
other  states,  permitted  by  comity  to  cany  on  business  in  this 
state. 

"  The  tax  called  in  Pennsylvania  the  tax  on  capital  stocJc 
is,  practically,  a  tax  on  the  net  profits  of  corporations,  laid  in 
such  manner  as  to  avoid  the  ditBculty  which  will  ordinarily 
arise  from  the  effort  to  tax  net  earnings,  consisting  in  the 
facility  with  which  such  a  tax  can  be  evaded. 

■'  The  plan  successfully  employed  in  diat  state  is  about  as 
follows :  If  the  dividend  or  dividends  made  or  declared  by 
a  corporation  during  any  year  amount  to  six,  or  more  than  • 
six  per  cent,  upon  the  par  value  of  its  capital  stock,  then  the 
rate  would  be  half  a  mill  upon  the  capital  stock  for  each  one 
per  cent,  of  dividend  so  made  or  declared  —  that  is,  the  cor- 
poration would  pay  a  tax  equal  to  one-twentieth  part  of  the 
dividend,  or  equal  to  five  per  cent,  upon  the  dividends ;  if 
no  dividend  has  been  made  or  "declared,  or  if  the  dividend 
has  not  amounted  to  six  per  cent,  upon  the  par  value  of  the 


I 


TAXI.VG    COA-POA'A  J70i\'S. 

capital  stock,  then  the  tax  is  at  the  rate  of  three  mills  upon 
each  dollar  of  a  valuation  of  the  capitaj  stock  made  accord- 
ing to  law,'  And  it  is  required  that  any  profit  matle  by  a 
company,  and  added  to  its  sinking  funil  without  a  division 
among  its  stockholders,  shall  be  treated  as  dividends  divided 
among  the  stockholders,  and  included  as  a  part  of  the  basis 
upon  which  said  tax  is  estimated. 

"  We  recommend  a  similar  tax  in  this  state,  excepting, 
however,  railroad  companies  and  banks  from  its  operation, 
because  we  have  already  provided  for  taxing  railroads  fiiUy, 
and  because  it  would  not  be  practicable  to  impose  such  a 
tax  on  national  banks. 

"  Every  transportation  —  telegraph,  express,  palace,  and 
sleeping-car  company  —  is  subjected  in  Pennsylvania  t( 
annual  tax  of  eight-tenths  of  one  per  cent,  upon  its  % 
receipts.  This  tax  is  in  addition  to  the  tax  on  the  capital 
stock  above  referred  to. 

"  We  recommend  diat  a  gross-receipts  tax  be  imposed 
upon  telegraph  companies  at  the  rale  of  two  per  cent. ; 
three  per  cent,  upon  telephone,  express,  title  insurance, 
safety  deposit  and  trust  companies,  parlor-car  and  sleeping- 
car  companies ;  and  one  per  cent,  on  domestic  insur: 
companies ;  leaving  the  tax  as  at  present,  one  and  one-half 
per  cent,  on  the  gross  receipts  of  foreign  insurance  com- 
panies. These  taxes'  will,  of  course,  be  in  addition  to 
tax  measured  by  the  companies'  dividend.* 


didn 


ip«c. 


;.  per : 


int  imposes  Ihc  folloM-ing  gross- 
TwQ  per  cent,  on  the  giosa  aoiounl  of  premiu 
lecled  by  insurance  companies,  whether  home  or  fureign,  and  one-bal 
of  one  per  cent,  on  all  lUrplus  over  and  abuve  ihe  nccestaiy  reserve 
but  the  value  of  the  real  estate  owned  by  Ihe  company  is  alhjwed  b 


130  TAXATION  AS  IT  SHOULD   BH. 

"The  reasons  for  a  special  gross-receipts  tax  upon  the 
companies  named  are  obvious.  They  enjoy  large  emolu- 
ments, which  they  are  only  capable  of  realizing  by  reason  , 
of  the  grant  of  corporate  franchises  from  the  state,  or 
permission  to  exercise  such  franchises  in  the  state.  They 
collect  large  sums  of  money  from  the  people  of  the  state, 
and,  with  the  exception  of  the  insurance  companies,  they 
are,  for  the  most  part,  absolute  monopolies  with  no  com- 
petition whatever,  and  the  power  to  establish  their  own 
charges  without  restraint  or  appeal,  and  enrich  themselves 
at  their  own  pleasure;  and  in  the  case  of  some  of  them, 
with  a  comparatively  small  outlay  of  capital.  It  is  true 
that  express  companies  may  be  said  to  have,  in  a  limited 
degree,  competition  with  the  railroads  over  whose  lines  ihey 
run,  but  this  can  scarcely  be  called  a  real  competition,  be- 
cause the  character  of  the  business  transacted  by  each  for- 
bids much  encroachment  on  the  part  of  the  other ;  and  if 
such  encroachment  takes  place,  it  is  most  likely  to  be  by 
the  express  company  upon  the  business  of  the  railroad 
company." 

The  Pennsylvania  system  of  taxation  of  net  revenues  as 
be  deducted  from  ihe  surplus  before  payment  of  one-half  per  ceol.  is 
required,  but  not  from  the  grma  receipts-  A  tax  of  one-halT  of  one  per 
cent,  upon  the  average  aniuunl  of  deposits  and  accumulalloni  in  Ihe 
savings  banks  after  dedueling  Ihe  value  pf  the  real  eilate  owned  \fj  the 
bank.  One  per  cenl.  upon  the  average  amount  nf  depcisits  in  every 
trust  company,  including  moneys  or  lecurities  as  (luslee  under  order 
of  court  or  olhecwise,  but  no  other  taxes  than  Chose  just  mentioned  are 
imposed  upon  deposits  or  accumalations  in  tbc  savings  banks  or  upon 
deposits  in  the  tiust  companies;  three  per  cent,  on  the  gfjss  receipt* 
frum  express  business,  telegraph  business,  or  telephone  business;  aitd 
two  pet  cent,  on  the  gross  receipts  of  all  steaniboali,  car,  or  transporta- 
tion companies  (of  course,  lhi<  does  not  refer  to  steam  railroads),  but 
Ihe  real  and  personal  properl)'  used  in  carrying  on  the  o|ier3tioni 
the  cumpaaies  so  t»ed  are  exempted  from  taxation." 


TAXING   CORPORATIONS. 


331 


well  asof  gross  receipts,  while  striving  after  a  nice  adjustmeol 
of  taxation,  is,  for  reasons  already  mentioned,  a  practice  not 
likely  to  work  so  well  as  a  tax  on  gross  revenues  alone. 

I  would  prefer  to  raise  the  rale  of  the  tax  on  gross  rev- 
enues above  that  recommended  by  my  colleagues,  if  neces- 
sary, and  abolish  the  tax  on  dividends,  rather  than  adopt  the 
more  complex  system  which  they  atlvocate.     The  taxation 

insurance  companies  at  two  different  rates,  according  to 
their  location  within  or  without  the  state,  never  appealed  to 

as  desirable,  although  it  is  done  in  many  states.  Ins 
ance  companies  are  highly  useful  institutions,  and  they  are 
liable  to  competition.  It  is  impolitic  to  place  any  undue 
burden  on  them.     The  disposition  to  do  this,  sometimes 

mifested,  ought  not  to  be  encouraged.  It  is  better  I 
insist  upon  stricter  business  methods  on  the  part  of  insur- 
ance companies,  and  more  adeijuate  guarantees  that  they 
vill  fulfil  their  coalracls  as  a  recompense  for  their  franchises, 
than  to  lay  heavy  taxes  on  ihem.  They  should,  of  course, 
be  obliged  to  pay  their  proper  share  of  taxes.  In  their  case 
there  is  more  reason  for  limiting  taxation  to  a  tax  on  ( 
dends  or  net  revenue  than  in  the  case  of  other  corporations. 

The  Maryland  system  of  taxing  incorporated  banks  works 
well.  They  are  taxed  by  the  state  authority,  namely,  the 
state  tax  commissioner.  The  actual  value  of  all  shares  ts 
computed,  and  from  this  the  assessed  value  of  all  real  estate 
s  deducted.  The  remainder  is  divided  by  the  number  of 
shares,  and  this  gives  the  value  of  each  share  for  purposes 
of  taxation.  ITie  bank  pays  the  tax  to  the  stale  commis- 
sioner for  the  shareholders,  and  charges  it  to  them.  Banks 
often  pay  local  authorities  also  and  deduct  the  same  from  the 
dividends.     The  Maryland  system  requires  all  corporations 

pay  taxes  on  stocks  and  bonds,  and  to  charge  the  tax  to 
holders  of  stocks  and  bonds;  and  this  is  an  excellent  and 


332 


TAXATION  AS  IT  SHOULD  BE. 


economical  plan  which  ought  everywhere  to  be  adoptedk 
The  Maryland  Tax  Commission  speaks  as  follows  of  th« 
Maryland  system  of  taxing  stocks  and  bonds  ;  — 

"Among  the  most  valuable  classes  of  personal  property 
are  the  capital  stock  in  Mar>iand  cor])orations,  and  the 
bonds  or  evidences  of  indebtedness  of  such  corporations, 
and  of  ihe  state  ;  as  to  these,  there  can  be,  and  so  far  as 
state  taxes  are  concerned  is,  no  difficulty  in  discovering  and 
valuing  them  and  collecting  the  taxes  thereon,  because  our 
system  requires  the  corporation  to  pay  the  tax  on  the  shares 
of  the  stock  owned  by  the  shareholders  and  a  bondholders' 
tax  upon  its  bonds.  There  has  been  considerable  difficulty 
in  the  collection  of  local  taxes  upon  the  bonds  of  domestic 
corporations,  because  a  similar  provision  of  law  has  not 
existed  as  to  local  taxes  on  the  bonds  of  coqiorations.  This 
we  propose  to  remedy  by  one  of  the  amendments  suggested 
by  this  commission." 

There  is  everywhere  difficulty  about  the  taxation  of  unin- 
corporated banks,  and  in  some  states,  notably  in  Ohio,  there 
has  been  much  complaint  on  account  of  the  discrimination 
against  state  and  national  incorporated  banks.  The  unin- 
corporated banks  return  little  or  no  capital,  and  the  private 
bankers,  as  those  are  called  who  are  unincorporated,  escape 
the  personal  properly  tax  by  devices  already  sufficiently 
elaborated.  This  is  a  grievous  injustice,  and  if  no  other 
way  can  be  devised  to  tax  all  bankers  alike,  it  would  s 
perfectly  proper  lo  compel  incorporation  for  all  engaged  in 
a  banking  business.  Possibly  practical  bankers  might  devise 
some  other  plan  whereby  private  bankers  could  be  com- 
pelled to  advertise  the  full  amount  of  capital  employed,  and 
to  pay  taxes  on  it  like  incorporated  bonds.  Public  policy 
does  not  consist  in  discouraging  national  banks,  —  the  best 
and  safest  banks  which  we  have. 


TAXING  CORPORATIONS. 


333 


It  might  be  well  to  add  a  small  income  tax,  or  a  tax  on 
dividends,  as  in  Pennsylvania,  in  order  to  compel  banks 
doing  an  extraordinarily  remunerative  business  to  pay  in 
proportion  to  their  ability.  Any  invidious  taxation  of  bank- 
ing institutions  is  bad  policy  and  injurious  to  the  economic 
interests  of  the  commonwealth.  What  has  already  been 
said  on  the  proper  treatment  of  natural  monopolies  should 
be  remembered  in  connection  with  the  matter  in  this 
chapter. 


CHAPTER    XI. 


MISCEI.LANEOUS  KINDS  OF  PERSONAL  PROPERTY. 


TAXATION  OF   HOUSEHOLD  GOODS, 

INSTEAD  of  entering  a  man's  house   to  ascertain  the 
vahie  of  furniture,  plate,  works  of  art,  and  other  house- 
hold property,  or  compelltrg  him  to  make  a  return  of  it,  I 
would  take  the  annual  rental  value  of  one's  dwelling  as  a 
basis  for  taxation.     It  makes  no  difference  whether  a  person 
occupies  his  own  house  or  not.     A  dwelling  has  an  annual 
rental  value,  and  this  can  be  readily  assessed.    This  I  would 
multiply  by  two,  and  take  this  sum  as  a  basis  of  taxation  to    , 
be  taxed  for  local  purposes  at  the  rate  at  which  real  estate 
is  taxed.     This  would  be  taken  as  an  equivalent  to  a  tax  on 
the  value  of  one's  household  effects,  and  if  a  person  has 
accumulated  works  of  art,  books,  and  other  valuable  things 
in  his  home,  which  produce  no  income,  it  is  a  good  thing 
that  he  is  by  this  plan  not  compelled  to  pay  a  tax  on  them. 
It  is  well  to  encourage  the  cultivation  of  art  and  the  beauti- 
fication  of  home.      The  proposal  to  tax  a  man  like   Mr. 
Walters  of  Baltimore,  who  ha.t  accumulated  the  tinest  col- 
lection of  paintings  in  the  United  States,  on  the  full  value  of   | 
his  art  gallery,  should  meet  with  no  favor  whatever.     Mr. 
Wallers,  in  the  formation  of  his  gallery,  has  made  himself  a 
public    benefactor.      He   helps  to  elevate  the  standard  of  1 
taste  and  to  cultivate  the  higher  faculties,  and  the  effects  of  | 
this  are  felt  sooner  or  later  even  by  the  poorest  member  of   I 
the  community. 


MISCELLANEOUS  PROPERTY.  335 

Taxation  based  on  rent  involves  neither  odious  inquisition 
nor  domiciliary  visits. 

EXEMPnOK  OF  CERTAIN   KINDS   OF  PERSONAL  PROPERTY. 

I  would  recommend  that  all  unenumerated  kinds  of  per- 
sonal property  be  not  taxed,  and  under  this  head  I  would 
include  mortgages,  promissory  notes,  book  accounts,  simple 
contract  debts,  and  other  private  securities.  Those  kinds 
of  personal  property  which  usually  escape,  and  which  ate 
paid  for  the  most  part  only  by  the  unfortunate  and  extremely 
conscientious,  I  would  exempt  altogether  from  taxation. 
Thus  the  cunning  and  unscrupulous  would  not  lie  placed  at 
an  advantage  over  their  worthier  or  less-favored  fellow- 
citizens. 

When  it  is  attempted  to  tax  this  kind  of  property,  it  is 
generally  found  desirable  to  allow  an  exemption  of  debt, 
and  by  contracting  debts  for  United  States  bonds,  which 
bonds  cannot  be  taken  into  account  in  state  and  local  taxa- 
tion according  to  the  decisions  of  our  courts,  it  is  possible 
for  any  person  of  means  to  evade  taxes  on  such  property. 
If  a  deduction  from  personalty  on  account  of  debts  is  not 
allowed,  —  and  to  prevent  evasion  of  taxes  it  never  has  been 
allowed  in  Maryland,  —  il  must  work  great  hardship  for 
those  who  obey  the  law.  It  must  be  remembered,  also,  that 
provision  has  been  made  in  other  recommendations  for  the 
taxation  of  all  income,  so  that  the  universality  of  taxation  is 
secured.  Taxation  of  gross  revenues  involves  taxation  of 
stocks  and  bonds,  so  there  is  no  need  to  concern  ourselves 
with  them. 

The  reports  of  the  financial  officers  of  the  state  of  Mary- 
land, so  far  as  1  have  observed,  are  not  so  made  that  it  is 
possible  to  tell  precisely  how  much  is  derived  from  each 
species  of  property ;  but  the  Appeal  Tax  Court  of  Ballimore 


336 


TAXATION  AS   IT  SHOULD  BE. 


has  already  been  quoted  in  this  report  to  the  effect  that  the 
amount  received  from  the  property  which  I  would  exempt 
altogether,  is,  in  Baltimore,  comparatively  small,  even  if  not 
insignificant.'  It  is  safe  to  say  that  the  amount  of  such 
property  outside  of  Baltimore,  taxed,  must  be  still  smaller, 
as  the  city  is  the  chief  home  of  this  kind  of  property.  It 
is  not  necessary  to  add  much  to  what  lias  already  been  said 
on  this  subject.  However,  the  question  is  often  asked.  Is  it 
not  better  to  reach  even  twenty-five  to  forty  i>er  cent,  of  such 
property  than  to  let  it  all  escape,  and  are  not  the  burdens 
of  real  estate  lessened  by  so  much?  I  unhesitatingly  reply, 
Nol 

First,  it  is  not  better  to  do  injustice  to  the  conscientious 
and  helpless.  A  person  need  not  be  even  a  believer  in 
revealed  religion  to  expect  that  a  nation  or  state  will  be 
prospered  in  proportion  as  its  institutions  are  based  on 
righteousness.    This  is  the  lesson  of  all  history. 

Second,  while  the  loss  will  be  only  small  to  the  tax-payer, 
on  account  of  the  small  returns,  according  to  all  testimony, 
of  the  property  in  question,  —  for  not  all  personal  property, 
but  only  the  items  mentioned  are  involved,  —  the  gain  from 
legal  exemption  would  be  great.  The  entire  system  of  taxa- 
tion would  be  simplified  and  the  labor  of  its  administration 

'  The  pcopoiUon  of  property  al  this  sort  taxed  in  Conncdlcul  tu  the 
entire  iBxahIc  baaia  in  t88j,  was  only  Ihiec  ond  three-fourlhi  per  cent. 
The  suiiuici  in  Port  IV.  will  help  the  ceader  to  see  huw  small  (he 
■mount  of  property  which  would  hereby  be  exempted.  The  tax  rale 
of  New  York  City  was  fz.t5  on  the  Sioo  in  1887.  Yet  Mayor  Hewitt 
estimates  Ihal  if  nil  personal  properly  excqit  bank  shares  were  relieved 
of  loxBlion,  it  would  be  necessary  lo  add  only  one-sixth  lo  the  rale  of 
taxation,  as  personal  property  now  yields  only  about  one-sixth  of  the 
total  amount  collected  by  taxation.  It  will  be  noticed  that  the  recom- 
mendations of  this  book  do  not  go  10  far  a*  Mayor  Hewitt,  becauia 
they  provide  for  the  taxation  of  most  kinds  of  property. 


MISCELLANEOUS  PROPERTY. 


337 


lesseoed.  Now,  any  one  who  makes  any  investmenls  in 
one  of  these  kinds  of  personal  property  in  question,  knows 
that  he  will  probably  escape  taxation,  but  on  account  of 
uncertainty,  he  is  obliged  to  ask  a  small  premium  to  com- 
pensate for  risk.  I  want  to  borrow  money  on  a  promissory 
note.  Well,  the  lender  could  let  me  have  it,  we  wil!  say,  for 
five  per  cent.,  if  he  were  certain  that  he  would  not  be  taxed 
on  money  lent ;  but  as  the  lax-assessor  may  possibly  find 
him  out,  he  says ;  "  I  must  have  one  per  cent,  extra  on 
account  of  risk.  Vou  must  pay  me  six  per  cent."  Thus  I 
come  back  to  my  former  point.  This  species  of  property  is 
practically  exempt,  as  matters  are,  in  most  cases,  but  the 
benefits  of  the  exemption  are  fully  diffused  only  in  case  the 
exemption  is  legal.  This  is  not  something  merely  theoreti- 
cal, but  something  with  which  every  experienced  banker  is 
familiar.  Why  do  federal  bonds  sell  for  so  high  a  premium 
as  to  produce  less  than  two  per  cent,  on  money  actually 
invested?  Why  do  Maryland  bonds  at  3.65  find  ready 
takers?  It  is  because  of  tax  exemption.  Thus  not  the 
money-lender  chiefly,  but  the  tax-payers  receive  the  bene- 
fits of  this  exemption.  A  business  man  who  appeared  before 
the  Maryland  Tax  Commission,  claimed  that  purchasers  of 
state  bonds  paid  the  highest  tax ;  that  the  tax  was  deducted 
in  advance  from  interest  paid.  Can  any  one  dispute  this 
proposition  successfully?  If  we,  in  Maryland,  legally  exempt 
this  property  of  a  high  degree  of  mobility,  we  simply  pro- 
mote its  tendency  to  flow  in  to  us,  and  on  account  of  the 
greater  supply,  we  can  obtain  its  use  for  a  smaller  percentage. 
The  case  of  real  estate  is,  in  this  respect,  it  is  manifest, 
entirely  different,  and  so  is  the  case  of  the  most  of  the 
property  which  it  is  proposed  to  tax. 


TAXA  TION  AS  IT  SHOULD   i 


DIFFUSION  OF  THE   BENEFITS  OF  EXEMPTION. 

The  diffusion  of  the  benefits  of  exemption  from  taxation 
can  perhaps  best  be  seen  by  a  concrete  illustration.  Any 
one  who  in  Baltimore  walks  from  Baltimore  Street  in  3 
northerly  direction  out  St.  Paul  Street  or  Calvert  Street, 
beyond  the  boundary  of  the  city,  mto  the  country,  will  notice 
a  large  number  of  houses  newly  constructed  or  in  process  of 
construction,  and  which  are  offered  for  sale  or  rent  at  far 
lower  prices  tlian  such  comfortable  houses  can  be  obtained 
for  in  any  other  great  city  in  the  American  Union.  It  is 
not  too  much  to  say  that  a  house  in  this  section  of  the  city, 
which  can  be  obtained  for  ^25  a  month  —  a  pleasant,  well- 
situated  house  —  could  not  be  obtained  in  any  other  city  of 
the  size  of  Baltimore  in  the  United  SUtes  for  less  than  {50 
a  month.  Now,  why  is  it  that  so  much  building  is  going  on 
and  that  houses  are  so  clieap?  If  any  one  thinks  that  the 
exemption  of  mortgages  from  taxation  is  not  connected 
with  it,  a  conversation  with  a  practical  builder  or  banker 
will  probably  disabuse  him  of  this  idea.  As  a  matter  of  fact, 
savings  banks  would  not  and  could  not  put  their  money  into 
such  improvements  in  Maryland  if  they  were  taxed.  They 
do  this  now;  but  if  mortgages  were  taxed,  money  now 
spent  in  Maryland  would  go  to  the  West,  just  as  thirty 
millions  of  dollars  have  recently  left  the  state  of  New 
Hampshire.  Who,  then,  gets  the  benefits  of  this  exemption  ? 
They  are  diffused  widely  through  the  community.  The 
workingman  does,  for  he  has  more  abundant  opportimides 
for  labor,  and  the  taxation  of  mortgages  would  be  a  blow 
which  he  would  feel.  In  addition  !o  this,  to  tax  mortgages 
would  tend  to  raise  his  rent.  The  real-estate  man  derives  a 
benefit  as  he  does  from  every  improvemecl,  for  it  raises  the 


I 
I 


the      ^H 


MISCELLANEOUS  PROPERTY. 


339 


value  of  his  land.  The  fanner  is  also  benefited  in  a  better 
home  market  for  his  produce.  The  merchant  is  benefited 
in  larger  sales.  If  the  money-lender  is  benefited  at  all,  his 
advantage  is  not  greater  than  that  of  other  members  of  the 
community. 


H  thl! 


CHAPTER    XII. 

TAXATION    OF    SAVINGS    BANKS.    CHURCHES,   AND 
EDUCATIONAL   AND   BENEVOLENT  , 

INSTITUTIONS. 

SAVINGS   BANKS. 

THIS  chapter  contains  a  reprint  of  a  part  of  my  special 
report  as  member  of  the  Maryland  Tax  Commission, 
with  a  few  alterations  and  a  few  additional  remarks.  It  is 
presented  in  this  form  because  a  concrete  study  is  apt  to  be 
more  effective,  and  because  what  is  said  of  Maryland  will 
apply  equally  well  to  other  states. 

Savings  banks  are  to  be  commended  to  the  special  con- 
sideration of  the  legislature.  They  ought  to  be  fostered  in 
every  proper  way  as  preventives  of  pauperism  and  crime,  and 
as  agents  of  civilization,  elevating  the  people,  rendering  them 
truly  independent,  and  increasing  the  wealth  of  the  com- 
munity. Most  of  the  capital  they  accumulate  would  either 
be  idle,  stored  away  in  old  chests  or  stockings  in  secret 
hiding-places,  or  would  not  exist  at  all,  but  would  have  been 
wasted,  were  it  not  for  savings  banks.  Very  few  savings 
banks  exist  in  the  South,  and  their  encouragement  is  much 
needed.  Ncariy  all  of  their  deposits  are  made  by  helpless 
or  ignorant  people  not  in  a  position  to  lake  care  of  them- 
selves. The  president  of  the  largest  savings  bank  in  Balti- 
more, which  has  sixteen  millions  of  deposits,  estimates  that 
this  is  the  case  with  ninety  per  cent,  of  the  deposits  of  hit  t 
bank.    Over  sixty  per  cent,  of  the  depositors  are  femalei>  ! 


TAXATION  OF  INSTITUTIONS. 


341 


Two  dangers  should  be  avoided  with  special  care.  One  is 
their  suppression  by  taxation,  the  other  is  the  removal  of  their 
capital  from  Maryland  investments  to  the  West  by  high 
taxation.  We  could  ill  afford  to  have  thirty  millions  and 
more  of  capital  leave  us,  and  yet  it  would  not  be  difficult 
to  take  it  away  from  Maryland. 

It  must  be  remembered  that  they  are  benevolent  institu- 
tions, their  officers,  as  a  rule,  serving  without  pay. 

Their  entire  exemption  has  been  urged  by  their  presidents, 
on  the  ground  of  public  policy.  It  has  also  been  proposed 
to  capitalize  the  interest  they  pay  on  such  deposits  over  t  lOO 
each,  as  are  not  covered  by  non-taxable  securities,  at  six  per 
cent.,  and  to  tax  this  at  the  usual  rate.  Whichever  plan  is 
pursued  it  would  be  perfectly  proper,  in  view  of  the  special 
favor,  to  exact  of  their  directors  more  stringent  safeguards 
than  now  legally  exist  for  depositors,  to  make  failure  as  remote 
a  contingency  as  possible  ;  for  the  failure  of  a  savings  bank 
is  a  terrible  calamity,  and  any  one  who  brings  it  about  by 
culpable  negligence,  speculation,  or  dishonesty,  richly  deserves 
the  penitentiary.  I  say  "  more  stringent  safeguards  than  now 
legally  exist,"  because,  as  a  matter  of  fact,  there  is  reason  to 
believe  that  our  Balrimore  savings  banks  have  adopted  ade- 
quate safeguards  voluntarily.  It  is  precisely  at  such  a  time, 
when  there  is  no  reason  for  apprehension,  that  laws  govern- 
ing savings  banks  should  be  made  so  strict  in  regard  to  pub- 
lication of  reports  and  other  safeguards  as  to  do  all  that  law 
can  do  to  render  them  absolutely  reliable.  It  may  be  proper 
to  limit  the  amount  of  deposits  of  any  one  person  in  order 
that  persons  of  means  may  not  make  an  undue  use  of  sav- 
ings banks.  It  is  also  desirable,  either  by  license  system  or 
otherwise,  to  prevent  the  establishment  of  unsound  institu- 
tions by  irresponsible  parties.  Such  savings  banks  in  New 
York  and  ebewhere  have  done  an  immense  amount  of  harm. 


342  TAXATION  AS  IT  SHOULD   BE. 

With  those  who  would  place  a  high  tax  on  them,  or  even  a 
higher  tax  than  they  now  pay,  I  must  disagree  entirely; 
although  1  readily  admit  that  some  of  the  deposiloi^  are 
wealthy  persons,  or  the  children  of  wealthy  parents.  While 
I  appreciate  the  exaggerations  of  the  press  in  regard  to  the 
interpretation  of  the  fact  that  deposits  are  large  and  growing 
in  our  savings  banks,  I  hold  that  any  one  who  fails  to  give 
them  credit  for  incalculable  good  is  unacquainted  with  their 
practical  workings. 

Through  the  courtesy  of  Mr.  Francis  T.  King,  president 
of  the  Provident  and  Central  Savings  Banks,  I  am  enabled 
to  give  statistics  in  regard  to  the  good  work  of  the  Baltimore 
savings  banks,  I  present,  herewith,  a  letter  and  a  table  which 
he  was  good  enough  to  send  me. 

"  Dear  Dr.  Ely  :  I  give  the  following  information  with 
pleasure.  All  but  ihe  IlaUimore,  Eutaw,  and  Centr^  savings 
l>ank!i  were  established  before  llie  war. 

"  I.  There  are  ten  savings  banks  in  the  eity- 

"  1.  There  are  105,172  depositors.'  Deducting  residents  at 
the  counties,  churches,  and  benevoient  assoclatioius,  and  deposi- 
tors who  have  accounts  in  more  than  one  bank,  the  number 
would  be  reduced  lo  9;, 000,  making  a  corresponding  reduction 
in  the  total  deposits ;  the  average  would  not  be  changed  as  given 
below. 

"  3.  The  deposits  average  ^297. 75. 

"4.  Since  the  rate  of  interest  was  reduced  to  three  per  cent., 
the  comparatively  helpless  depositors  are  about  ninety  per  cent., 
and  that  class  of  deposits  about  the  same.  There  are  now  very 
few  large  deposits  in  the  savings  banks.  —  that  is,  deposits  over 
tjooo.  Most  of  them  tielong  to  old  de]H>sitors  who  began  with 
smali  savings.  Since  the  reduction  of  interest  many  of 
larger  deposits  have  been  drawn  lo  pay  for  small  houses. 

'  Ratber,  number  of  accoants:  bat  Ihe  difiererice  between  number 
tcronnts  md  number  of  depotiton  con  hBrdly  be  very  contiderable. 


of  the    ^1 


TAXATIOtf  OF  INSTITUTIONS. 


343 


"  I  also  submit  for  comparison  the  statistics  of  the  banks  for 
'liscount  and  deposit,  national  and  state  banks. 

'1.  Number  of  nntional  and  stale  bonkt 34 

3.  Capital Ji3 ,788,760.00 

3.  [ndlvlduaJ  deposiis 1 11 ,677,166.34 

4.  Individual  depaiilora  {eUimaleJ 31.143 

5.  Average  la  each  depositor {i.Da5.37 

6.  Deposiij  of  oiher  banlis  and  Uniled  Stales  govera- 

mral (4.934167&M 

"  Yours  very  truly, 

"FRANasT.  KiMG. 

P<S.    Sixty  per  cent,  of  the  deposits  in  the  savings  banks 
e  by  females  in  their  own  names  or  jointly  with  their 


STATISTICS  or  SAVINGG    HANKS   IN   HALTIMOItE. 


i«Lca«>«  J..  .»,. 

KO.  „  «C..™. 

V.KPS.KH*-. 

Savings  Bunk  of  Ballimore    .     . 

47.'7° 

«i6,3».337  "6 

EutaM'  .Savings  Bunk    .... 

a8,23B 

8,913.75*  6' 

Central  Savings  Bank   .... 

ia.658 

1.597.475  27 

2,949 

1,430,201  88 

German  Savings  Bank  .... 

*.43S 

927.307  83 

Maryland  Savings  Bank    .     .    . 

M'5 

426.067  58 

Protident  Savings  Bank    .    .    . 

S^' 

66^97  « 

ilopkins  Place  Savings  Bank    . 

9S0 

iio,ia6  35 

Broadway  Savings  Bank   .    .    . 

3,601 

301, 35'  81 

Border  Stale  Savings  Bank   .    . 

I,30S 

221.937  08 

105.172 

»3^^3'5.55fi  =3 

Average  pCT  depositor,  $297,75. 


Mr.  King  very  properly  says  that  *'  the  motto  of  everj 
savings  bank  should  be  safety;  the  rate  of  interest  is  a  se< 
ondary  question." 


S+t  TAXATION  AS  IT  SHOULD  BE. 

CHURCH   BUILDINGS. 

The  question  as  to  the  propriety  of  taxing  church  edifices 
is  one  which  most  be  discussed  from  broad  grounds  of  pub- 
lic policy.  If  it  promotes  the  general  welfare  to  exempt 
church  buildings  from  taxation,  it  is  perfectly  proper  to 
do  so. 

There  are  two  questions  to  be  asked  :  Do  churches  pro- 
mote the  intellectual,  moral,  and  economic  interests  of  the 
people?  Will  they  be  aided  in  theirwork  by  the  exemption 
of  the  property,  used  purely  for  religious  purposes,  from  tax- 
ation? All  stales  except  California  answer  both  of  these 
questions  in  the  affirmative.  While  I  might  not  be  prepared 
to  advocate  a  change  of  the  existing  system  in  California,  I 
certainly  am  not  prepared  to  advocate  a  change  of  the  an- 
cient custom  in  Maryland.  I  concur,  however,  in  these 
passages  from  the  report  of  my  colleagues  ;  — 

"  Under  the  existing  law  all  grounds  appurtenant  to  houses 
of  worship,  which  are  not  yielding  a  revenue,  are  treated  by 
the  assessors  as  exempted.  Therefore,  a  large  lot  of  ground 
can  be  purchased  in  Baltimore  city,  a  church  or  chapel  built 
upon  one  comer  of  it,  and  the  whole  lot  held  free  of  taxes, 
and  therefore  free  of  expense  until  the  surrounding  property 
has  been  improved,  and  the  value  of  the  church's  vacant  lot 
greatly  enhanced.  Church  members,  who  entertain  the 
proper  and  laudable  desire  to  gratify  their  taste,  or  minister 
to  their  comfort  by  means  of  handsome  or  costly  church 
property,  should  do  so  at  their  own  expense  ;  and  it  cannot 
be  claimed  that  religious  bodies  have  any  right  to  enhance 
their  wealth  by  participating  in  the  increased  value  of  land, 
which  results  from  the  improvement  of  the  neighborhood,' 
without  paying  the  state  and  county  the  same  taxes  paid  by 

'  A»  lo  the  church,  Ihiii  wuuld  be  called  Kn  uneai 


TAXATION  OF  INSTITUTIONS.  MS 

Others  for  the  benefits  of  government,  which  render  them 
1  the  possession  of  their  land.  .  .  .  We  have  be- 
lieved it  judicious  to  go  so  far  as  to  recommend  the  taxation 
of  parsonages  and  al!  other  church  property  except  the  house 
of  worship  itself,  and  the  ground  necessary  for  the  uses 
thereof,  which  we  have  thought  it  best,  in  view  of  the  above- 
mentioned  construction  now  placed  by  the  assessors  upon 
the  law,  and  similar  possible  abuses,  to  limit  to  ten  feet  on 
either  side  of  the  building." 

EDUCATIONAL  AND    BENEVOLENT   INSTTTUTIONS. 

I  am  obliged  to  withhold  my  assent  from  the  recommen- 
dation of  my  colleagues  in  the  tax  commission,  looking  to 
the  taxation  of  the  property  of  incorporated  schools,  colleges, 
and  universities.  Nothing  yields  so  large  a  return  to  the 
lax-payer  as  this  exemption.  If  the  state  of  Maryland  herself 
had  provided  her  youth  with  a  complete  system  of  schools 
hke  Michigan,  beginning  with  the  common  schools,  and  by 
suitable  gradation  extending  up  to  the  magnificent  Univer- 
sity of  Michigan,  it  might,  perhaps,  be  proper,  like  CaJifomia, 
to  tax  private  institutions,  but  such  a  system  would  cost 
Maryland  at  least  (500,000  per  annum,  and  this  sum  is  noir 
saved  to  the  people  of  the  state.  Until  the  state  of  Maryland 
resolves  to  provide  her  own  youth  with  complete  instruction 
I  public  institutions,  it  is  poor  policy  to  tax  those  who 
attempt  to  supply  this  deficiency,  and  thereby  confer  an 
inestimable  benefit  upon  the  commonwealth, 

Washington  and  Jefferson  both  emphasized  repeatedly,  in 
their  various  public  and  private  writings,  the  importance  o( 
educational  institutions  of  the  highest  character,  as  essentia] 
to  the  welfare  of  the  people  and  the  maintenance  of  free  and 
enlightened  institutions.  Washington  never  ceased  to  urge 
upon  his  countrymen  the  advantages  of  a  great  national  uni* 


346  TAXATION  AS  IT  Sl/OCLD   BE. 

versity,  and  for  the  establishment  of  one  he  made  a  donation 
of  his  shares  in  the  Potomac  Company.  In  a  lettur  dated 
March  i6,  1795,  he  uses  these  words  in  speaking  of  his  pro- 
posed national  university;  "The  time  is  therefore  come 
when  a  plan  of  universal  education  ought  to  be  adopted  in 
the  United  Slates.  Not  only  do  the  exigencies  of  public  and 
private  life  demand  it,  but,  if  it  should  evur  be  apprehended 
that  prejudice  would  be  entertained  in  one  part  of  the 
Union  against  another,  an  efficacious  remedy  will  be  to 
assemble  the  youth  of  every  part  under  such  circumstances 
as  will,  by  the  freedom  of  intercourse  and  collision  of  sen- 
timent, give  to  their  minds  the  direction  of  truth,  philan- 
thropy, and  mutual  conciliation."  Washington's  Farewell 
Address  contains  these  wise  words,  which  the  people  of 
Maryland  cannot  make  a  mistake  in  laying  to  heart  ;  "  Pro- 
mote, then,  as  an  object  of  primary  importance,  institutions 
for  the  general  diffusion  of  knowledge.  In  proportion  i 
the  structure  of  a  government  gives  force  to  public  opinion, 
it  is  essential  that  public  opinion  should  be  enhghtened." 

Jefferson  advocated  in  Virginia  the  establishment  of  a 
complete  system  of  instruction,  from  common  school  to 
university,  holding  rightly  —  for  all  experience  teaches  it — 
that  common  schools  must  be  but  poor  and  indifferent, 
unless  stimulated  and  elevated  by  ihe  presence  and  assistance 
of  superior  institutions.  Like  Washington  he  exerted  him- 
self more  actively  in  favor  of  the  university  than  for  any 
other  part  of  his  educational  system.  In  a  report  to  the 
General  Assembly  of  Virginia,  on  the  subject  of  Education, 
signed  by  othere,  but  which  derived  its  inspiration  from 
Jefferson  —  if  indeed  he  did  not  actually  write  it  —  these 
words  are  found  :  "  In  free  states,  where  the  government  ia 
founded  upon,  and  is  the  organ  of  the  public  will,  it  is  indis- 
pensably necessary  that  that  will   should  be  enlightened." 


I 

I 


TAXATION   OF  INSTIXUTION^. 


347 


With  regard  to  the  contemplated  University  of  Virginia,  it  is 
further  remarked  :  "The  advantages  that  will  result  from  the 
establishment  of  such  an  institution  are  incalculable.  At 
present  a  great  proportion  of  our  youth  are  sent  out  of  the 
state,  and  sometimes  out  of  the  United  States,  for  the  acqui- 
sition of  science  in  general,  or  with  a  view  to  a  proficiency 
in  some  of  the  learned  professions.  Large  sums  of  money 
are  thus  annually  sent  away.  .  .  ,  The  young  men  of  our 
country  thus,  by  leaving  their  own  state  before  their  judg- 
ments are  formed,  will  frequently  acquire  elsewhere  habits 
and  opinions  uncongenial  with  those  of  their  fellow-ciliKens. 
Estranged  by  absence  from  the  customs  and  principles  of 
their  parents  and  of  their  ancestors,  they  return  to  some 
degree  aliens  to  their  native  land.  Every  enlightened  states- 
man must  consider  the  education  of  the  youth  of  a  country 
as  intimately  and  inseparably  connected  with  its  high  pros- 
perity. It  is  a  high  and  solemn  duty,  which  the  government 
is  Ixiund  by  every  consideration  of  patriotism  and  interest 
to  discharge."  Thus  was  the  University  of  Virginia  estab- 
lished, and  to-day  the  state  pays  840,000  a  year  in  taxes 
for  its  maintenance. 

The  university  which  by  the  munificence  of  Johns  Hop- 
kins was  established  in  Baltimore  more  nearly  corresponds 
to  the  ideas  of  Washington  and  Jefferson  than  any  other  in 
the  United  States.  It  brings  together  .American  youth  from 
every  section,  and  unites  them  in  feelings  of  a  common 
patriotism.  No  other  institution  has  done  so  much  to  keep 
our  youth  in  their  own  country  for  the  highest  education, 
and  to  prevent  that  estrangenient  from  their  native  land,  so 
lamented  by  Jefferson  in  his  day.  The  highest  instruction 
is  never  remunerative  in  the  narrow  sense  of  that  word, 
though  it  in  the  end  pays  as  nothing  else  does.  The  fees 
from  the  students  of  the  Johns  Hopkins  University  have  not 


34S 


TAXATIQN  AS  IT  SHOULD   BE. 


covered  in  the  past  one-tenth  of  its  expenses.  To  tax  this 
institution  would  cripple  its  usefulness,  for  it  lends  a  hand 
to  gifted  but  poor  young  men,  destined  on  account  of  this 
timely  aid  to  attain  greatness  and  become  benefactors  of 
their  kind.  Is  it  indeed  desired  by  the  legislature  that  our 
highest  institutions  of  learning  should  be  rendered  so  expen- 
sive as  to  exclude  all  but  the  wealthy?  Is  this  worthy  of 
Maryland  ?  Is  this  the  spirit  of  democracy  which  is  our 
boast?  Some  snobs  would  be  glad  to  see  all  favors  to  pwor 
students  abolished,  and  the  tuition  fees  trebled,  but  do 
the  hard-working  people  of  Maryland  desire  this?  Does 
Maryland  desire  the  unenviable  notoriety  of  being  the  only 
state  in  the  Union,  neither  to  provide  a  tmiversity  for  its 
youth  nor  to  allow  others  to  do  so  without  being  subject  to 
taxation? 

A  hospital  might  also  be  managed  as  a  money-making 
institution,  but  that  was  never  the  intention  of  the  trustees 
of  the  Hopkins  Hospital  so  soon  to  be  opened.  Shall  the 
benefits  of  that  institution  also  be  restricted  to  those  who 
count  their  money  by  the  hundred  thousand  ?  This  would 
be  conduct  worthy  of  those  who  regard  our  public  school 
system  as  ranking  with  "  free  soup  houses." 

I'hese  two  institutions  are  mentioned  first,  because  I  am 
most  familiar  with  these ;  but  the  other  philanthropic  insti- 
tutions for  which  Maryland  is  famed  would  likewise  be 
crushed  by  taxation,  for  they  were  never  designed  to  make 
money.  The  Pratt  Library,'  the  Peabody  Institute,  and  the 
new  College  for  Girls,  which  our  Methodist  fellow-citizens 
are  establishing,  occur  at  once  to  the  mind.     All  these  insti- 

'  This  could  hnidly  be  taxed,  for  it  is  legally  regncdcd  as  a  public 
instilulion.  being  supported  by  annual  niiiiropriaiioHS  which  Ibc  tily 
wu  indaced  lo  make  by  Mr.  Pratt's  donaliaii  of  uvcr  SSoo.ooo  to  the 
dt;,  in  addiiion  to  over  ^200,000  spent  in  buildings. 


TAXAUO,'^   VF  IXSriTUTIOiVS.  3« 

tudons  bring  youth  to  Maryland,  and  their  ikmilies  often 
come  with  them.  Our  advantages  make  our  state  a  favorite 
place  of  residence  for  people  of  North  and  South,  and  to 
tax  those  institutions  which  are  our  pride  and  our  glory 
would  not  only  be  a  humiliating  spectacle ;  it  would  drive 
from  us  many  millions  of  <lo]Iani  annually,  and  would  in- 
crease the  burden  of  taxation  by  lessening  the  taxable  basis. 
No  part  of  the  community  would  escape  the  loss,  and  many 
who  minister  to  the  wants  of  those  attracted  to  Maryland 
by  our  advantages  would  be  completely  mined. 


CHAPTER  XIII. 

TECHNICAL    DETAILS    AND    ADMINISTRATIVE 
MACHINERY. 

THE  administrative  machinery  connected  wiih  the  rev 
enues  of  states  and  cities  is  an  essential  part  of  the 
general  administration  of  the  country,  and  the  reader  might 
with  propriety  be  referred  to  works  on  administration  for  a 
treatment  of  this  subject.  It  is,  indeed,  impossible  to  deal 
with  the  topic  placed  at  the  head  of  this  chapter  adequately 
in  this  place.  A  few  general  principles  will  be  called  to  the 
reader's  attention,  and  a  scheme  for  the  assessment  of  taxes 
in  cities  and  counties  will  be  elaborated. 

It  is  manifest  from  what  precedes  that  we  must  make  a 
sharp  distinction  between  the  tax  officials  concerned  with 
local  taxation  and  those  concerned  with  state  taxation. 
Real  estate  should  be  left  entirely  to  the  former,  and  be 
assessed  under  the  supervision  of  a  single  county  authority, 
like  the  county  auditor  of  Ohio.  Where  cities  like  Bal- 
timore are  in  no  county,  municipal  authorities  should 
alone  be  intrusted  with  assessment  and  collection  of  taxes 
on  real  estate.  It  is  desirable  in  the  case  of  large  cities 
like  New  York  and  Philadelphia  to  indcntify  completely 
city  and  county.  It  is  indeed  difficult  to  tell  what  such  cities 
gain  by  the  existence  of  any  county  government.  Its 
absence  has  been,  I  venture  to  say,  an  unmixed  blessing  to 
Baltimore.  State  and  county  administration  shoulil  each  be 
under  one  single  responsible  head.     The  absence  of  such  a 


TECHNICAL   DETAILS. 


he^  is  1  general  complaint  among  states  which  do  not  have 
one.  An  officer  like  the  state  auditor  of  Ohio  or  comptroller- 
general  of  Georgia,  with  large  powers,  is  a  necessary  feature 
of  good  administrative  machinery.  When  such  machinery 
is  provided  in  a  county,  the  fair  assessment  of  real  estate 
throughout  the  county  need  never  occasion  difficulty. 

Property  ought  always  to  be  assessed  at  its  true  selling 
value  at  voluntary  sale,  not  at  forced  or  auction  sale.  Any 
other  rule  opens  the  way  for  an  abuse  of  power,  and  is  cer- 
tain to  lead  to  injustice.  The  reasons  for  such  assessment 
are  well  stated  in  these  words  by  the  Illinois  Revenue  Com- 
mission of  1886:  — 

'■The  law  requires  that  all  property  siiall  be  assessed  at  its 
fair  cash  value.  Assesson  are  sworn  so  to  value  it;  but 
they  are  far  from  doing  it.  Real  estate  is  generally  put  down 
at  one-third  of  its  value,  frequAilly  much  less  ;  and  personal 
property  at  a  yet  smaller  fraction.  If  there  were  uniformity 
in  the  reduction,  perhaps  but  little  harm  would  be  done,  but 
there  is  not.  The  assessor,  having  forsaken  the  standard  of 
the  law.  is  without  guide  or  restraint,  except  his  own  varying 
judgment,  and  subject  to  pressure  of  importunate  tax-payers, 
who  pull  steadily  downward.  The  desire  of  each  locality  to 
avoid  the  payment  of  an  undue  proportion  of  the  state  tax 
would,  of  itself,  lie  sufficient  to  explain  this  tendency  to  low 
assessments,  and  the  tendency  is  intensified  by  the  impres- 
aion,  everywhere  prevalent,  that  low  assessments  stand  for  a 
low  rate  of  taMlion ;  and,  vU€  vfrsa,  that  full  assessments 
will  increase  the  amount  of  taxes  lo  l>e  paid. 

"The  study  of  the  problem  convinced  the  commission 
that  the  liability  to  inequitable  assessments  is  greatly  in- 
creased by  this  system  of  undervaluation. 

"  Inequalities  that  would  be  so  suggestive  as  to  be  almost 
self-corrective  as  between  full  values,  escape  notice  when  a 


3SZ 


TAXATION  AS  IT  SHOULD  BE. 


fractional  value  obtains,  and  the  low  price  at  which  property'  i 
is  ratL'd  virtually  acts  as  an  estoppel  of  complaiui  on  the  part  . 
of  [iie  property -owner,  even  tliough  his  property  is  rated 
higher  than  that  of  his  neighbor.  He  cannot  complain  thai 
his  property  is  rated  loo  high  per  se,  and  it  seems  ungener- 
ous and  unneighborly  to  complain  that,  in  proportion,  his 
friends  and  neighbors  are  rated  too  low." 


OA-ms. 

The  subject  of  oaths  has  already  been  touched  upon. 
Pmssia  does  not  permit  them  in  matters  of  taxation,  and 
England  requires  them  only  in  exceptional  cases.  The  Eng- 
lish income  tax  returns  are  signed  by  the  tax-payers,  who 
"declare" — the  fonnula  reading"!  declare."  The  pen- 
alty for  false  declaration  is  a  substantial  one,  namely,  ^10 
and  a  trebling  of  the  tax.  The  Illinois  Revenue  Commission 
in  the  report  just  refened  to  use  these  words  respecting 
oaths:  — 

"In  regard  to  the  assessment  of  personal  property  by  indi- 
viduals, believing  the  recjniremenl  of  an  oath  to  a  schedule 
as  generally  ineffectual  in  obtaining  a  disclosure  of  property, 
we  have  omitted  such  requirement.  We  believe  such  re- 
quirement to  be  debauching  to  the  conscience,  and  subver- 
sive of  public  morals  —  a  school  for  perjury,  promoted  by 
law.  With  the  unscrupulous  it  imparts  no  additional  verity 
whatever  to  the  schedule,  and  it  is  wrong  and  oppressive  to 
the  honest  tax-payer  that  he  should  be  compelled  to  take 
upon  his  conscience  an  obligation  which  he  well  understands 
is  disregarded  as  a  rule  by  others.  Such  requirement  has  no- 
where been  found  effective  in  the  disclosure  of  property  that 
the  assessor  could  not  have  otherwise  discovered.  We  have 
therefore  proposed  that  the  requirement  of  the  oath  be  done  < 


TECHNICAL  DETAILS. 


away  with,  2nd  that  there  be  substituted  a  substantiat  penalty 
for  a  false  schedule." 

It  would  seem  to  be  wise  to  abandon  oaths  for  returns, 
allowing,  however,  the  tax  officials  to  require  an  oath  or 
affirmation  at  their  discretion. 

It  goes  without  saying  that  more  care  should  be  takei]  in 
the  selection  of  assessors  and  collectors,  who  ought  to  be 
elected  for  longer  periods  than  one  year.  Appointment 
under  good  civil  service  rules  would  be  still  better  for  all, 
save  the  heads  of  the  county  and  the  state  lax  departments, 
who  might  be  elected.  Even  these  heads  would  better  be 
appointed  by  suitable  authority  and  retained  during  good 
behavior.  Efficiency,  stability,  and  independence  of  officials 
are  the  essential  conditions  of  good  financial  administration. 
It  is  desirable  to  give  a  large  number  of  citizens  a  partici- 
pation in  government  through  the  medium  of  unpaid  hon- 
orary commissions,  appointed  to  co-operate  with  regular  paid 
officials.  The  Baltimore  custom  of  requiring  proposed  ex- 
penditures of  large  sums  of  money  to  be  raised  by  loans,  to 
be  submitted  to  the  people  for  ratification,  is  to  be  com- 
mended. It  is  an  excellent  old  democratic  custom.  This 
referring  back  of  questions  to  the  people,  called  the  refer- 
endum, has  been  used  with  excellent  effect  in  Switzerland, 
and  its  use  ought  to  be  extended  in  our  states,  cities,  and 
other  local  political  units.  The  disposal  of  any  great  piece 
of  public  property,  like  the  Philadelphia  gas-works,  ought 
never  to  be  possible  unless  authorized  by  popular  vote. 
Such  a  provision  would  at  once  put  a  quietus  on  many 
schemes  for  plundering  the  public. 

MONEV  TO   BE   RAISED   FOR  THE  COMING   YEAR. 

The  slipshod  way  many  Maryland  counties  have  of  spend- 
ing the  money  and  levying  taxes  for  past  expenditures  only 


354  TAXATION  AS  IT  SHOULD  BE. 

keeps  them  always  in  arrears,  and  is  condemned  by  eveiy 

intelligent  official  of  practical  experience.     Taxes  should  be 
levied  for  the  estimated  expenditures  of  the  coining  year. 


DISCOUNTS   FOR  THE  PROMPT  PAYMENT  OF  TAXES. 

On  this  subject  I  quote  from  the  "  Report  of  the  Baltimore 
City  Tax  Commission  "  ;  and  as  the  quotation  embodies  my 
own  views  it  is  unnecessary  to  make  any  additions.' 

"  But  sections  thirty-five  and  thirty-six  contain  provisions 
making  material  changes.  For  years  past  taxes  have  not 
been  due  and  payable  until  the  first  of  January  of  the  year 
following  that  for  which  they  were  levied.  No  penally 
attached,  nor  could  payment  be  enforced  before  that  time. 
Many  years  ago  this  was  felt  to  be  a  serious  inconvenience, 
for  no  one  paid  taxes  until  the  end  of  the  year,  and  the  city 
was  often  without  money,  and  compelled  to  obtain  tempo- 
rary loans  to  meet  current  expenses. 

"  In  1835  Mr.  F.  J.  Dallam,  then  city  collector,  suggested 
in  his  annual  report  that  '  inducements  be  held  out  for  the 
prompt  and  pimctual  discharge  of  the  public  dues,  by  allow- 
ing to  those  who  pay  for  certain  periods  a  discount,"  etc.,  as 
was  done  in  other  cities,  and  '  charging  interest  on 
remaining  unpaid  by  a  specified  day.'  This  recommenda- 
tion was  followed  by  Resolution  No.  62,  of  1S36,  which  for 
the  first  time  established  the  system  of  discounts  in  Balti- 
more, and  required  that  interest  at  the  rale  of  six  per  cent, 
per  annum  be  charged  on  all  bills  unpaid  after  January  i. 
The  system  has  remained  in  force,  unbroken,  until  the 
present  day.     It  has  been  discussed  and  criticised,  favored 

'  It  will  be  underalood  that  ^11  of  the  members  of  the  comTniwoo, 
iDyself  included,  wniked  on  this  propobal  ni  well  as  on  the  other  sn|^ 
gestioni  ream  the  sttte  and  city  tax  cocninission  leports,  which  I  qoola 


TECHNICAL   DETAILS. 


3SS 


anJ  opposed,  in  official  reports  and  elsewhere,  bul   not 
abolished. 

"  We  deem  the  system  of  discounts  unjust  and  impiolitic. 
In  the  words  of  Mr.  Jno.  B.  Seidenstricker,  city  collector  in 
'  may  be  considered  a  bonus  to  tax-payers  for  the 
performance  of  a  duty.'  Many  of  the  best  administea-d 
cities  in  this  country  have  abolished  them,  and  in  one  or 
two  other  instances  they  have  been  reduced  to  trifling  sums. 
Mr.  Thomas  Hills,  chairman  of  the  assessors  of  Boston,  says  : 
'Boston  does  not  have,  and  has  not  had  for  more  than 
twenty-live  years,  to  my  knowledge,  the  system  of  discounts. 
It  is  a  matter  of  local  option.  .  .  .  Those  towns  which 
allow  them  are  often  agitated  on  the  question  of  their  dis- 
continuance—  mainly  on  the  ground  (which  I  think  is  well 
taken)  that  the  city  or  town  taxes  all,  alike  the  rich  and  the 
poor,  to  raise  a  fund  to  be  distributed  to  the  rich  alone,  as 
that  class  only  arc  in  a  position  to  profit  by  the  exemption 
of  assessment,  which  is  nominally  open  to  all.' ' 

'"In  diicuiNng  the  ()u«tion  of  diicounr*  the  Musschusetti  Tax 
ConimiiaiDiiera  <xj:  'In  oui  opinioD  the  lystcm  \%  open  to  grave 
■buie.  a  wholly  unneceBaiy -- not  only  worki  an  inequality,  bat  an 
inequality  whkb  favon  those  uho  have  money  in  hand  at  the  expente 
or  lh(we  whu  have  not,  and  pull  an  increued  tax  directly  u|>on  the 
pulls  and  cslal»  of  the  poor  and  embairassed,  while  lo  Ibe  wne  degcce 
ii  relieves  tbe  forehanded  and  (he  rich, 

'/"rri/.  The  practice  ii  wholly  unnecemary.  The  whole  power  of 
the  slate  ii  behind  the  tas-gatherer.  He  c»n  compel  payment  by  arrest. 
distre-s,  sale,  or  tujl.  His  demand  is  juil,  for  a  sum  cetlain,  and  of 
whkh  the  lax-pnyer  has  sufficient  notice  lo  enable  him  lo  be  ready 
«iih  ihc  means  of  payment. 

•  St<fnd.  The  allowance  of  the  ditcount  works  rnequality  between 
the  iBi-paycn  who  can  avail  themielvei  of  il»  provisions  and  Ihoae  who 

■  We  will  iuppoie  the  valuation  of  a  town  lo  be  (100,000,  and  the 
■Tiiouni  of  money  needed  for  the  year  Jiooo.     Jf  no  JiscounI  is  allowed. 


I 


sss 


TAXATION  AS  IT  SHOULD   BE. 


"  In  1884  the  amount  of  taxes  remitted  in  discounts  was 
$90,967.19.  TTie  largest  sum  to  which  discounts  ever 
amounted  in  this  city,  in  3  single  year,  was  $192, 844.08, 
in  1877.  In  no  year,  for  fifteun  years  past,  has  the  amount 
of  discounts  been  as  low  as  ^75,000  dollars.  Of  course, 
this  loss  out  of  the  levy  must  be  made  up,  or  there  will  be 
a  deficiency  in  the  city  treasury.  So  every  year,  in  estimat- 
ing what  rate  of  tax  it  will  be  neccessary  to  levy,  the  sum  to 
which  it  is  anticipated  the  discounts  will  amount  during  the 
year  is  reckoned,  and  the  tax  rate  increased  by  enough  to 
produce  it. 

"We  therefore  recommend  that  the  practice  of  allowing 

(he  tt.x  voted  and  laid  will  be  {2000,  and  Ihc  rate  fao  per  ihoiuand. 
But  suppose  the  town  has  been  in  the  haliit  of  voling  a  discount  of  ten 
per  cent,  for  tlie  pTutnpl  payment,  and  Ihal  it  is  well  imdcrBlood  Ihat 
eighty  per  cent,  of  the  tax  will  be  paid  in  season  to  receive  the  abatement. 
The  lown  mufll  vole  to  raise  at  leaal  )i6o  more  than  the  Buni  needed, 
and,  as  in  Iheury,  every  one  may  avail  himself  of  ihe  discount,  it  can- 
not aafely  direct  its  assessors  to  levy  less  than  fiaoo,  —  or  rather,  oi  the 
discount  it  froca  the  gross  sum.  f  2322,21. 

'  The  account  of  the  tax-payer,  whose  estate  is  included  in  the  valua- 
Lt  f  10,000,  and  who  is  able  to  avail  himself  of  Ihe  discount,  standi 


thua:- 


Vdujil 


Aciutl  Tu 


'  While  the  poorer  citizens,  whose  aggregaie  valua 
same  amount,  but  who  Rnd  themselves  unable  lu  pay  in 
Ihc  deduction,  stand  thus :  — 


J22.2; 


'Bui  if  no  discount  had  been  allowed,  the  case  would  have  stood  a 
follows :  — 

Vdualkiii.  Raie.  Tu. 

The  rich  man    .    .    ,    flo,ooo        (20.00 
The  poor  man   .     .     .       10,000  20.00 


I  An  equality 


TECHNICAL  DETAILS. 


357 


s  be  discontiDued.  Recognizing  the  fact  that  some 
mode  must  be  adopted  to  prevent  the  city  treasury  from 
being  left  empty  for  a  lai^ge  portion  of  the  year,  we  have 
framed  sections  thirty-five  and  thirty*six  of  '  Ordinance  No. 
I  ■  to  meet  this  want,  and  also  for  the  purpose  of  mak- 
ing the  burden  of  taxation  less  onerous  to  persons  of  limited 
means,  by  dividing  the  year's  taxes  into  four  equal  parts, 
and  providing  that  one  shall  become  due  in  each  of  the  four 
quarters  ending  April  15,  July  15,  October  15,  and  January 
I.     This  mode  of  payment  wiil  keep  the  city  supplied  with 

'  If  no  AlluwBncc  t>  mxle  when  the  lai  is  valed  Tor  Ibe  amoanl  to  be 
lost  in  discount,  the  result  mutl  be  the  same.  A  greater  tai  muil  be 
■twstetl  Ibe  lucceedJnE  or  some  future  year  lu  make  up  the  dellctency 
ctuicd  by  the  discount,  tiid  of  this  lux  the  per<on  unable  l»  pay  in 
leaiuD  to  receive  the  abalement  most  pay  more  than  his  share. 

'  It  is  the  essence  of  sucb  a  iliscuuni  that  it  can  be  availed  of  by  tbe 
rich,  and  cannot  by  the  poor.  Whatever  its  amount,  — one  per  cent. 
or  ten,  —  ajid  there  ii  no  reslricliun  in  the  law,  it  must  practically  work 
an  equality  at  the  expense  of  (huge  who  have  least. 

'  Third.  As  a  means  of  relieving  the  towns  fur  the  payment  of  inter- 
est Xit  money  lurruu'ed,  the  plan  is  must  absurd.  In  one  city  the  tax 
bills  are  required  to  be  in  the  hands  of  the  collector  on  the  first  of  Sep- 
tember, and  the  discount  allnwed  ftir  payment  before  the  i6lh  of  Sep- 
lenitiet  is  such  that  Ihc  rale  of  inlere<it  paid  by  the  city  is  eqalvntenl  Lu 
110  per  cent,  per  antiom,  while  in  many  towns,  the  discouil  calculated 
in  the  same  way  is  equivalent  to  the  payment  of  interest  at  40  per 
cent,  per  annum.  The  bate  statement  of  the  fact  shows  that  the  prac- 
tice cannot  be  defended  on  the  ground  uf  economy  in  the  saving  of 
interest  to  municipalities. 


^  Fifth.  This  practice  is  inconsistent  with  the  allitudc  which  a  state 
ought  to  maintain  toward  its  subjects.  The  command,  with  penalty 
for  disobedience,  rather  than  reward  fit  thnt  cimpliance,  which  gov. 
emment,  a*  of  course,  has  the  right  to  expect,  is  the  true  policy  fiii 
■  state.'" — Htftrtt  tf  Ike  Ctmmiisieiitrt  reialiitg  tt  Tajcalimt,  (875. 
/V75- 


358 


TAXA  TION  AS  IT  SHOULD   BE. 


money  at  all  periods  of  the  year  without  paying  a  discount 
for  it,  and  will  facilitate  the  payment  of  taxes  by  persons 
who  cannot,  at  one  lime,  readily  cominand  the  amount  of 
money  required  to  meet  their  taxes,  as  now  demanded. 

"  Section  thirly-six  proposes  to  secure  the  prompt  payment 
of  taxes  by  imposing  a  penalty  at  (he  rate  of  one  per  cent. 
per  month  for  (ailure  to  pay,  instead  of  offering  a  reward  in 
the  shape  of  discounts  for  payments.  In  oilier  particulars, 
the  provisions  of  existing  laws  and  ordinances  for  the  enforce- 
ment of  payment  of  taxes  in  arrears,  are  left  undisturbed, 
except  that  the  collector  is  prohibited,  under  pain  of  re- 
mo  vaJ  from  office,  from  indulging  delinquent  tax- payers 
beyond  the  period  fixed  in  the  proposed  ordinance." 

It  is  urged  that  people  living  outside  of  cities  receive 
the  bulk  of  their  income  once  a  year  on  the  sale  of  farm 
produce,  and  that  it  is  really  more  convenient  for  all  con- 
cerned that  they  should  pay  all  their  taxes  at  one  time.  If 
there  is  nothing  to  be  accomplished  by  allowing  ihem  to  pay 
in  instalments,  it  is  best  not  to  change  the  law  in  that  respect. 
I  would  prefer,  however,  quarterly  payments  of  taxes  in 
municipalities,  to  assimilate  direct  to  indirect  taxation  as 
nearly  as  possible  in  point  of  convenience.  Quarterly  pay- 
ments are  allowed  in  Savannah,  and  the  superintendent  of 
police,  General  Anderson,  told  me  that  the  people  found 
Ihem  a  great  convenience.  Probably  no  man  ought  to  be  in 
a  better  position  to  pass  an  opinion  on  the  workings  of  a  law 
like  this  in  its  effects  on  the  people  of  moderate  or  slender 
means,  than  a  superintendent  of  police.  At  the  same  time 
Major  Hardee,  Ihe  head  of  the  tax  department,  told  me  that 
it  occasioned  him  no  inconvenience  and  required  no  extra 
clerk  hire,  as  the  labor  was  simply  distributed  more  evenly 
throughout  the  year.     He  said,  indeed,  that  there  was  a 


TECHNICAL   DETAILS. 


3S9 


positive  advantage  in  the  system,  as,  on  account  of  tlie 
instalment  plan  there  was  less  difficulty  in  collection, 

In  Quebec,  Canada,  people  are  allowed  to  pay  part  of 
their  taxes  ai  one  lime,  and  similar  testimony  was  offered 
regarding  the  great  convenience  this  method  offered  to  the 
masses.  I  was  indeed  toid  that  the  poorer  people  in 
Quebec  gave  the  tax  officials  less  trouble  and  were  less  in 
arrears  than  their  wealthier  fellow- citizens.  The  system  of 
quarterly  payment  is  genera!  in  German  cities,  and  appears 
to  be  very  advantageous,  and  I  am  sure  that  republican 
America  ought  not  to  be  less  considerate  in  her  dealings 
with  the  people  than  imperial  Germany.  People  of  slender 
means  in  Baltimore  regard  it  as  a  hardship  that  they  are 
forced  to  pay  all  their  taxes  at  one  time,  and  pitifui  cases 
are  relateil  of  the  elTect  of  this  plan. 

Rumors  reach  me  of  strong  opposition  to  this  change  at 
the  City  Hall,  on  the  part  of  clerks  in  the  tax  departments. 
Now  while  no  one  is  more  appreciative  of  the  diligence  and 
integrity  of  many  of  the  public  servants  of  the  people  of 
Baltimore,  I  cannot  close  my  eyes  to  the  inevitable  opposi- 
tion on  the  part  of  a  large  portion  of  the  office-holding  class 
to  whatever  disturbs  the  routine  of  their  work,  nor  can  I 
persuade  myself  that  the  wishes  of  the  tax  department 
should  take  precedence  of  the  wishes  of  the  tax-payers.  If 
the  number  of  employes  is  insufficient,  then  a  larger  force 
should  be  engaged,  and  a  very  few  extra  clerks  would  be 
sufficient.  I  must  then  adhere  to  the  recommendation  of 
the  Baltimore  Commission's  report  of  1886,  ihat  payment 
of  taxes  in  quarterly  instalments  be  allowed  in  Baltimore, 
and  this  plan  I  would  recommend  for  other  cities,  while  I 
would  allow  counties  to  decide  for  themselves  in  regard  to 
the  time  of  paying,  provided  of  course  that  the  taxes  should 


360  TAXATION  AS  IT  SHOULD  BE. 

be  levied  and  collected  promptly  as  often  as  once  a  year  at 
least. 

The  following  quotations  from  the  "  Report  of  the  Mary- 
land Tax  Commission  "  give  some  of  the  main  features  of  a 
system  of  municipal  and  county  administrative  machinery 
for  the  assessment  of  taxes.  The  various  members  of  the 
commission  gave  considerable  thought  to  this  topic,  and  it 
is  believed  their  schemes  will  be  found  suggestive,  although 
it  might  be  desirable  to  modify  it  to  a  greater  or  less  extent 
to  meet  the  needs  of  each  particular  state  and  city.  The 
quotations  are  slightly  altered.' 

COUNTIES. 

The  county  treasurer  of  each  county  in  this  state  shall  be 
chairman  of  the  board  of  assessors  of  his  county.  He  shall, 
before  the  first  day  of  December  in  each  and  every  year, 
appoint  two  assessors  for  each  three  collection  districts  in 
his  county,  and  if  the  number  of  collection  districts  is  not 
divisible  by  three,  he  shall  appoint  an  additional  assessor  if 
there  are  two  collection  districts  left  after  making  the  divis- 
ion ;  otherwise  he  shall  appoint  no  additional  assessor.  But 
if  the  county  be  not  divided  into  election  districts,  tiien  the 
county  commissioners  shall  divide  it  into  as  many  assess- 
ment districts  as  they  may  deem  necessary,  but  an  assess- 
ment district  shall  never  be  conterminous  with  an  election 
district ;  and  the  county  treasurer  shall,  before  the  first  day 
in  December  in  each  year,  appoint  two  assessore  for  each 
three  such  districts.  The  county  treasurer  shall  have  full 
authority  to  remove,  for  cause  shown  and  recorded,  any 
assessor  appointed   by  him.      Said  assessors  shall   be  ap- 

'  5o  man)'  altenitloni  are  made  that  it  would  be  unjust  to  my  col- 
le^ues  in  the  tnx  cumminion  la  use  qualalion  macki.  There  it  leu 
nccettlty  fur  ibis  beouie  I  louk  part  in  framing  the  bills. 


TECHNICAL  DETAILS. 


361 


pointed  without  regard  to  politics.     During  the  year  1888 

one-tliird  of  the  assessors  shall  be  appointed  for  one  year, 
one-third  for  two  years,  and  one-lhird  for  three  years,  and 
thereafter  every  assessor  appointed  by  ihe  county  treasurer 
shall  hold  office  for  three  years  from  the  date  of  his  appoint- 
ment, unless  sooner  removed  by  Uie  treasurer ;  but  in  case 
of  any  vacancy  occurring  by  death,  resignation,  removal 
or  other  cause,  the  treasurer  shall  fill  such  vacancy  by 
appointment  for  the  unexpired  term. 

The  assessors  for  the  several  districts  of  each  county, 
together  with  the  count)'  treasurer,  shall  constitute  the  board 
of  assessors  for  the  county.  The  county  treasurer  shall  call 
said  board  together,  in  the  month  of  December  in  each 
year,  upon  such  day  as  he  shall  select,  when  he  shall  read  to 
them  such  laws  ot  parts  of  laws  as  may  relate  to  the  duties 
of  their  office,  and  shall  instruct  them  concerning  their 
duties,  and  shall  especially  caution  them  that  ihey  must 
value  |)roperty  at  its  full  cash  value,  without  looking  to  a 
forced  sale ;  and  they  shall  consult  together  concerning 
their  said  duties. 

The  county  treasurer  shall  cause  to  be  published,  once  a 
week,  for  three  weeks,  during  the  month  of  January  in  each 
year,  in  some  newspaper  or  newspapers,  not  more  than  two, 
published  in  the  county,  or  if  there  be  no  newspaper  pub- 
lished in  the  county,  then  in  some  newspaper  or  newspapers, 
not  exceeding  two,  circulating  in  the  county,  a  notice  to 
every  person  of  and  over  the  age  of  twenty-one  years,  to 
return  all  schedules  herein  provided,  duly  filled  and  signed, 
to  the  assessor  of  his  district,  on  or  before  the  first  day  of 
February  next  ensuing ;  and  every  such  notice  shall  set  forth 
the  post-office  address  of  the  assessors  of  the  several  districts 
in  the  county ;  and  the  county  treasurer  shall  cause  to  be 
printed  and  delivered  10  his  assessors  by  the  first  day  of 


362 


TAXATfO.V  AS  IT   SHOULD    BE. 


Janviary  in  every  year,  as  many  copies  as  may  be  requisite 
of  the  blank  form  of  schedules  set  forth  in  this  law. 

It  shall  be  the  duly  of  every  such  assessor  to  send  by 
mail,  before  the  tenth  day  of  January  in  each  year,  to  every 
person  whose  name  appears  on  the  tajt  books  of  his  district, 
and  to  every  person  in  his  district,  so  far  as  he  may  know 
or  ascertain  them,  copies  of  the  form  of  schedules  provided 
in  this  article  ;  and  every  form  shall  have  distinctly  written 
or  printed  upon  it  the  name  and  post-office  address  of  the 
assessor  to  whom  it  is  to  be  returned. 

It  shall  be  the  duty  of  every  person,  of  or  over  the  age  of 
twenty-one  years,  residing  in  any  county  of  this  stale,  and  of 
every  person  of  or  over  said  age  who  owns  any  taxable  per- 
sonal property  permanently  located  in  any  county  of  this 
state,  though  he  does  not  reside  therein,  or  is  in  receipt  of 
an  income  exceeding  S6oo,  to  return  to  the  assessor  of  his 
district,  copies  of  the  schedules  hereinafter  provided,  duly 
filled  and  signed,  on  or  before  the  first  day  of  Febrvtary  in 
each  and  every  year. 

Every  person  knowingly  signing  any  schedule  containing 
any  wilfully  false  statement  shall  be  deemed  guilty  of  a  mis- 
demeanor, and  upon  conviction  thereof,  shall  be  sentenced 
to  undergo  confinement  in  the  penitentiary  for  not  less  than 
one  year  nor  more  than  ten  years. 

After  valuing  the  property  and  income  of  such  persons  as 
have  not  returned  schedules  as  required  by  this  article,  the 
said  assessor  shall  add  ten  per  cent,  to  the  total  value  of  such 
of  said  properly  and  income  as  is  taxable,  of  which  said 
addition  it  shall  be  the  duty  of  the  assessor  imposing  such 
per  centum  to  give  notice  to  the  person  so  failing  to  make 
the  return ;  provided,  that  the  county  treasurer  shall  have 
power,  for  good  cause  shown,  to  remit  such  penaltv  at  any 
time  before  the  fifteenth  day  of  May  next  following,  to  any 


TECtmiCAL   DETAILS. 


person  applying  for  such  remission,  who  shall  at  the  same 
time  make  a  full  return. 

While  engaged  in  making  valuations  the  said  assessors  in 
each  county  shall  meet  as  a  board  of  assessors  at  the  office 
of  the  county  treasurer  one  day  in  every  two  weeks,  when 
each  assessor  shall  return  all  valuations  completed  by  him 
since  the  last  previous  meeting  of  the  board ;  and  all  such 
valuations  shall  be  passed  upon  by  said  board,  which  shall 
have  full  power  to  review,  alter,  and  equalize  all  valuations ; 
and  the  valuations  of  the  assessors  shall  be  finally  made  by 
a  majority  of  said  board,  in  its  sessions ;  provided,  that  if 
said  hoard  cannot  complete  its  work  in  its  said  bi-weekly 
sessions,  it  may  be  called  together  by  the  county  treasurer 
and  sit  for  that  purpose  between  the  first  and  tenth  days  of 
May. 

Before  the  valuations  of  the  board  of  assessors  shall  have 
been  returned  to  the  county  commissioners,  as  hereinafter 
provided,  all  final  valuations  made  by  said  board  shall  be 
examined  by  the  county  treasurer,  who  shall  deduct  from 
the  total  valuation  of  the  property  of  each  person  whose 
property  has  been  valued,  the  said  board's  valuation  of  any 
exempted  property  which  may  have  been  included  in  said 
total  valuation  of  such  person's  property,  and  shall  indorse 
upon  the  account  of  each  person's  property  the  items  so 
deducted  from  his  account,  and  the  said  board's  valuation 
of  such  items  ;  and  he  shall  note  thereon  the  total  valuation 
of  the  taxable  property  of  such  person. 

The  county  treasurer  of  each  county  shall,  not  later  tiian 
the  fifteenth  day  of  May,  in  each  year,  return  the  valuations 
of  the  board  of  assessors  to  the  county  commissioners, 
noting  at  the  same  time  those  who  have  failed  to  return 
schedules  as  required,  and  the  fact  that  the  sum  of  ten  per 
centum  has  been  added  to  the  value  of  the  taxable  property 


TAXATION  AS   IT  SHOULD   BE. 


of  every  such  person,  as  fixed  by  the  said  board,  except 
where  such  penalty  has  been  remitled  by  the  said  treasurer ; 
and  such  valuations  shall  remaia  in  the  office  of  the  county 
commissioDers  for  twenty  days,  open  to  the  inspection  of 
persons  interested  in  them,  but  only  real  estate  valuations 
shall  be  open  to  public  inspection.' 

Between  the  fifteenth  day  of  May  and  the  fifth  day  of 
June,  in  each  year,  any  person  interested  in  any  property 
returned  for  taxation  by  the  county  commissioners,  may 
appeal  fi-om  the  valuation  of  the  board  of  assessors  to  the 
county  commissioners,  who  shall  hear  and  decide  all  such 
appeals,  and  may  afiirm  or  alter  the  valuations  appealed 
from,  as  they  shall  judge  fair,  just,  and  according  to  law.  All 
appeals  shall  be  heard  and  disposed  of  before  the  tenth  day 
of  June  in  the  same  year. 

The  county  commissioners  may  not  remit  the  ten  per 
cent,  required  by  this  act  to  be  added  where  any  person 
fails  to  return  a  schedule,  except  as  to  any  such  part  as 
they  may  abate  of  the  valuation  upon  which  it  is  impcBcd ; 
but  if,  upon  investigation,  and  after  giving  opportunity  for 
hearing  to  any  one  who  has  failed  to  make  a  return,  and  the 
ten  per  centum  penalty  for  which  failure  has  not  been 
remitled  by  the  county  treasurer,  the  said  commissioners 
believe  that  such  omission  was  wilful  and  intentional,  and 
with  the  intent  to  evade  the  payment  of  taxes,  they  shall 
add,  in  their  discretion,  not  more  than  fifty  per  centum  nor 
less  than  twenty-five  per  centum  to  the  valuation  of  the  tax- 
able property  which  he  should  have  returned.' 

I  It  must  be  lememberetl  that  ihe  inspection  of  grand  juries  or  lome 
similar  body  whose  proceedings  ate  secret,  is  an  essential  part  of  Ihll 
scheme  of  taxsCion. 

*  In  the  Middle  and  Western  states,  county  boardi  of  supecviMn 
imc  respects  to  the  county  commisiioners  of  SoiUheni 


TECHNICAL  DETAILS. 


CITV   ASSESSORS. 

There  shall  be  appointed  in  tlie  city  of  Baltimore,  in  the 
same  manner  as  other  city  oflitcrs  are  appointed,  sixteen 
discreet  and  competent  persons,  to  be  called  city  assessors, 
whose  duty  it  shall  be  to  value  all  taxable  property  and  in- 
comes in  the  city,  or  belonging  to  residents  thereof,  except 
such  property  as  is  excepted  from  valuation  by  them  and  all 
e  whether  taxable  or  not.  The  said  3sses.sors  shall  lie 
appointed  without  regard  to  politics,  and  sliall  each  receive 
a  salary  of  fifteen  hundred  dollars  per  annum.  They  shall 
take  the  oath  provided  by  ordinance,  and  give  bond  for  ihe 
faithful  discharge  of  their  duties,  as  other  ciiy  officers. 
Immediately  after  the  appointment  of  said  assessors  the 
mayor  shall  designate  one  of  them  to  be  chairman  of  the 
board  of  assessors,  and  the  person  so  appointed  chairmao 
shall  continue  to  act  in  said  capacity  until  the  expiration  of 
his  term  of  office  as  assessor,  unless  sooner  removed  from 
the  chairmanship  by  the  mayor.  Whenever  there  is  a 
vacancy  in  the  chairmanship  of  the  Iward  of  assessors,  the 
mayor  shall  appoint  one  of  the  assessors  to  be  chairman  of 
the  board. 

In  the  year  eighteen  hundred  and  eighty-eight,  sixteen 
city  assessors  shall  be  appointed,  four  of  whom  shall  remain 
in  office  and  serve  for  one  year,  four  for  two  years,  four  for 
three  years,  and  four  for  four  years,  accounting,  as  to  all  of 
Ihem,  from  the  first  day  of  March,  i8S8;  which  several 
terms  of  service  shall  be  determined  by  lot  at  their  first 
meeting. 

In  the  month  of  February,  in  each  succeeding  year,  there 
shall  be  appointed  four  city  assessors,  in  the  place  of  those 
whose  term  of  office  shall  expire  upon  the  first  day  of  March 


366  TAXATION  AS  IT  SHOULD  BE. 

in  such  year  j  and  the  said  assessors  appointed  as  prescribed 
by  this  section,  shal!  continue  in  office  for  four  years. 

Whenever  any  vacancy  shall  occur  in  the  office  of  city 
assessor  by  death,  disqualification,  resignation,  removal,  or 
otherwise,  such  vacancy  shall  be  filled  by  appointment  for 
the  unexpired  term  which  shall  have  become  vacant. 

As  soon  as  may  be  in  the  year  eighteen  hundred  and 
eif^hty- eight,  and  thereafter  annually  in  the  month  of  Febru- 
ary, there  shall  be  appointed,  in  the  same  manner  as  other 
city  officers  are  appointed,  a  clerk  to  the  city  assessors,  who 
shall  receive  a  salary  of  fifteen  hundred  dollars  per  annum. 
Said  clerk  shall  attend  daily  at  the  office  of  said  assessors, 
and  he  shall  keep  the  minutes  of  their  meetings ;  he  shall 
also  carefully  preserve  the  records  of  the  said  office  ;  receive 
all  papers  required  to  be  delivered  at  or  deposited  in  the 
same  ;  index  and  keep  in  proper  order  all  papers  and  books 
required  to  be  kept  open  to  public  inspection  therein ; 
transmit  to  the  clerk  of  the  Appeal  Tax  Court  a  copy  of  all 
valuations  made  by  the  city  assessors  immediately  upon  the 
same  becoming  Hnal ;  and  on  or  before  the  twenty-fifth  day 
of  February,  in  each  and  every  year,  he  shill  deliver  to  the 
clerk  of  the  Appeal  Tax  Court  copies  of  all  valuations  then 
remaining  in  the  office  of  the  city  assessors,  whether  or  not 
the  same  have  become  final ;  and  upon  any  appeal  being 
taken  from  any  valuation  made  by  the  city  assessors  to  the 
Appeal  Tax  Court,  he  shall  immediately  deliver  to  the  clerk 
of  said  court  all  schedules,  valuations,  and  olhcr  papcn 
which  relate  alone  to  the  case  in  which  such  appeal  is  taken, 
and  copies  of  such  parts  of  all  other  papers  as  relate  thereto, 
and  he  shall  perform  such  other  duties  as  properly  pertain 
to  his  office.  And  if  the  mayor  shall  deem  it  necessary, 
then  in  the  same  manner,  and  at  the  same  time  with  the 
appointment  of  said  clerk  to  the  city  assessors,  there  shall 


TECHNICAL  DETAILS, 

be  appointed  an  assistant  clerk  to  the  city  assessors,  who 
shall  receive  a  salary  of  twelve  hundred  dollars  per  annum, 
and  whose  duty  it  shall  be  to  assist  the  said  clerk  to  the 
city  assessors  in  the  discharge  of  the  duties  of  his  office  by 
performing  such  part  of  the  work  thereof  as  the  said  city 
assessors  may  direct. 

The  city  assessors  shall  assemble  in  meeting  at  least  once 
a  week,  for  the  transaction  of  general  business,  and  espe- 
cially for  the  hearing  of  any  appeals  that  may  be  brought 
before  them  by  persons  dissatisfied  with  valuations  made  by 
any  of  them,  as  hereinafter  provided. 

The  city  assessors,  in  meeting  assembled,  shall  have 
power  to  provide  and  establish  rules  and  regulations  for  the 
conduct  of  such  meetings,  for  the  making  of  valuations  by 
the  respective  assessors,  and  for  the  time,  place,  and  manner 
of  hearing  appeals ;  and  to  require  the  attendance  of  wit- 
nesses, and  the  production  of  books  and  papers.  Any 
person  who,  after  having  been  duly  notified  to  appear  as  a 
witness,  or  produce  any  books  or  papers,  before  the  said 
assessors,  in  meeting  assembled,  shall  refuse  or  fail  so  to  do, 
shall,  unless  excused  by  the  city  assessors,  forfeit  and  pay  a 
fine  of  not  less  than  fifty  nor  more  than  one  thousand  dol- 
lars, which  shall  be  collected  as  other  fines  and  penal- 
ties are  now  or  may  hereafter  be  collected  in  the  city  of 
Tlaltimore. 


VALUATION   OF  REAL  AND  LEASEHOLD  PROPERTY  IN 

crrii-. 
Between  the  first  day  of  April  and  the  first  day  of 
September  in  the  year  eighteen  hundred  and  eighty-nine, 
the  city  assessors  shall  value  all  real  and  leasehold  prop- 
erty in  the  first,  second,  third,  fourth,  fifth,  and  sixth 
wards.     Between  the  first  day  of  April  and  the  first  day  of 


368  TAXATION  AS  IT  SHOULD   BE. 

September,  in  the  year  foilowing,  the  said  assessors  shall 
value  all  real  and  leasehold  property  in  the  seventh,  eighth, 
ninth,  tenth,  eleventh,  twelfth,  and  ihirtetnth  wards.  And 
between  ihe  first  day  of  April  and  the  first  day  of  Septem- 
ber, in  Ihe  year  thereafter,  the  said  assessors  shall  value  all 
real  and  leasehold  property  in  the  fourteenth,  fifteenth,  six- 
teenth, sevcnleelh,  eighteenth,  nineteenth,  and  twentieth 
wards.  .\nd  between  the  said  days  in  the  fourth  year  from 
the  year  first  above  mentioned,  the  said  assessors  shall  again 
value  the  property  which  they  are  hereinbefore  required  to 
value  in  said  first  mentioned  year ;  and  so  in  the  fifth  and 
sixth  years,  they  shall  again  value  the  said  property  valued 
in  the  second  and  third  years  respectively  ;  and  so  they  shall 
continue  in  the  same  manner,  each  year  revaluing  the  real 
and  leasehold  property  valued  the  third  previously.  But 
whenever  there  may  have  been  a  considerable  appreciation 
in  the  value  of  any  real  or  leasehold  property,  the  said 
assessors  shall  immediately  value  the  same,  and  they  shall 
forthwith  give  notice  of  such  revaluation  to  the  owner  of 
such  property  ;  and  the  owner  of  any  property  so  revalued 
because  of  appreciation  in  value,  who  may  be  dissatisfied 
with  any  such  revaluation,  may  appeal  therefrom  lo  the 
Appeal  Tax  Court ;  provided,  such  appeal  be  taken  within 
twenty  days  from  the  time  of  revaluation ;  and  in  case  of 
any  depreciation,  by  fire  or  other  cause,  the  said  assessors 
shall  have  power,  upon  the  application  of  the  owner,  to  make 
such  abatement  as  they  may  deem  just,  and  such  owner 
shall  have  the  right  to  appeal  from  the  decision  of  said 
assessors  upon  such  an  application,  to  the  Appeal  T 
Court ;  provided  such  appeal  be  taken  within  twenty 
from  the  date  of  such  decision  by  the  said  assessors. 

In  valuing  real  or  leasehold  property,  the  city  assessors 
shall  value  each  lot  or  parcel  of  ground  separately ;  and  h 


'  days      ^H 

essors     ^^| 
indm    ^^1 


TECHNICAL   DETAILS. 


369 


their  return  thereof  they  shall  describe  each  lot  by  its  loca- 
tion, naming  the  street  or  streets  upon  which  it  binds,  or  i! 
it  binds  upon  no  street,  but  upon  an  alley  or  alleys,  then 
such  alley  or  alleys  shall  be  named,  also  the  number  of  front 
feet  and  depth  of  such  lot;  and  they  shall  value  improve- 
ments separately  from  the  ground  upon  which  they  stand, 
and  in  addition  to  the  description  of  such  ground,  the  street 
number  of  the  improvement  shall  be  given. 


The  city  assessors,  in  making  valuations  of  property, 
whether  real  or  personal,  shall  do  so,  ward  by  ward,  in 
regular  order,  taking  up  each  ward  in  order,  according  to  ils 
number,  and  completing  as  far  as  practicabk,  their  work 
therein,  before  beginning  to  make  valuations  in  another 
ward.  Before  the  assessors  begin  their  work  in  any  ward, 
the  chairman  of  the  city  assessors  shall  divide  such  ward 
into  assessment  districts,  and  sluU  assign  the  several  as- 
sessors to  the  respective  districts,  as  far  as  practicable,  send- 
ing them  two  by  two  logelher ;  and  he  may  at  any  time 
change  said  assessment  districts ;  and  the  said  chairman 
shall  have  the  general  control  and  direction  of  the  work  of 
the  assessors.  Whenever  the  said  assessors  shall  have  com- 
pleted, as  far  as  practicable,  their  valuations  in  any  ward,  such 
valuations  shall  remain  in  the  ofRce  of  said  assessors,  open 
to  inspection  by  any  person  interested  therein,  and  except 
as  to  real  estate  to  no  one  else,  for  twenty  days  from  the 
time  of  such  completion  ;  and  at  the  time  of  the  said  com- 
pletion of  the  valuations  in  any  ward,  the  said  assessors  shall 
cause  to  be  published,  jn  not  less  than  three  daily  newspapers 
published  in  this  city,  a  notice  that  the  valuations  of  prop- 
erty (specilying  whether  real  and  leasehold  or  personal)  in 
such  ward  are  open  to  such  inspection  in  the  office  of  the 


370  TAXATION  AS  IT  SHOULD  BE. 

city  assessors,  and  setting  forth  the  period   within  which 

appeals  will  be  received. 

Any  person  interested  in  any  property  valued  by  any  city 
assessor,  shall  have  the  right  to  appeal  from  such  valuation 
to  the  city  assessore  in  meeting  assembled,  at  any  lime 
within  the  twenty  days  during  which  said  valuation  remains 
in  the  office  of  said  assessor,  as  provided  in  the  preceding 
section ;  and  any  person  dissatisfied  with  the  decision  of  the 
said  assessors  in  meeting  assembled,  upon  his  appeal  to 
therD,  may  appeal  therefrom  to  the  Appeal  Tax  Court  at  any 
time  within  ten  days  aJlcr  such  decision  is  made,  and  the 
decision  of  said  court  shall  be  final ;  provided  that  in  case 
any  appeal,  whether  to  the  city  assessors  or  Appeal  Tax  Court, 
shall  not  have  been  heard  and  decided  before  the  taxes  or 
any  instalment  of  taxes  assessed  upon  the  valuation  appealed 
from  have  become  due,  the  pendency  of  such  appeal  shall 
not  postpone  the  payment  of  such  taxes,  but  they  shall  be 
paid ;  provided,  that  such  payment  shall  not  prejudice  the 
right  of  the  peRon  appealing  to  further  prosecute  his  appeal ; 
and  in  case  he  should  thereafter  be  allowed  a  deduction 
upon  the  said  valuation,  the  excess  of  taxes  theretofore  paid 
thereon  shall  be  credited  to  him  on  account  of  any  taxes 
he  may  then  owe,  or  the  first  which  may  thereafter  become 
due. 

The  mayor  and  city  council  of  Baltimore,  shall  in  iS88, 
appoint  a  board  to  consist  of  at  least  three  persons,  one  to 
be  appointed  for  two  years,  one  for  four  years,  and  one  for 
six  years,  and  thereafter  each  person  to  be  appointed  for  six 
years,  to  be  styled  the  Appeal  Tax  Court,  who  shall  meet  from 
time  to  time  for  the  purpose  of  hearing  appeals  and  making 
transfers  and  correcting  the  accounts  of  assessable  property 
charged  to  tax-payers,  and  the  assessment  thereof;  the  said 
mayor  and  city  council  may  also  appoint  such  number  ol 


TECHNICAL   DETAILS.  Ill 

'  a^essors  as  they  may  deem  necessary  in  investigating  and 

ascertaining  all  omitted  property,  and  assessing  and  return- 
ing the  same  to  the  Appeal  Tax  Court. 

The  mayor  and  city  council  shall  fill  all  vacancies  in  said 
Appeal  Tax  Court,  as  soon  as  practicable  after  any  may  happen 
therein,  in  the  maimer  provided  for  in  such  cases  of  vac; 
cies  of  other  city  officers ;  and  the  members  of  said  board 
shall  receive  such  compensation  as  the  mayor  and  city  coun- 
cil shall  provide  to  be  paid  by  the  city. 

It  is  impossible  to  present  a  bill  for  the  collection  of  taxes, 
and  for  other  features  of  state  and  local  taxation,  without 
extending  unduly  the  limits  of  the  present  work.  The 
changes  which  in  each  locality  will  be  required,  in  the  above 
draflof  abill,  willnot  be  difficuh  to  make.  Fifteen  hundred 
dollars,  for  example,  wili  secure  the  services  of  fairly  gooc 
men  as  assessors  in  Baltimore,  More  would  be  required  ii 
New  York  City,  where  it  costs  twice  as  much  to  live  in  an; 
comfort.  Beggarly  salaries  are  economy  of  the  penny  wise 
pound  foolish  order. 

CONCLUSION. 

What  has  been  submitted  in  this  work  is  nothing  merely 
theoretical,  but  an  improved  system  of  taxation,  every  part 
of  which  has  been  tested  by  experience,  every  part  of  which 
is  in  harmony  with  the  principles  of  true  democracy.  It  is 
simple  and  easily  enforced,  and  if  to  any  it  appears  co 
plex,  it  is  only  by  reason  of  novelty.  The  more  carefully  it 
is  examined,  the  more  thoroughly,  I  am  convinced,  will  it 
meet  with  approval.  It  aims  lo  distribute  the  burdens  of 
government  according  to  ability  to  bear  ihem,  to  simplify 
administration,  and  to  encourage  business  by  removing  those 
taxes  and  forms  of  taxation  which  fetter  it,  and  giving  it  so 


T 


372 


TAXATION  AS  IT  SHOULD  BE. 


far  as  taxation  is  concerned  as  good  opportunities  in  one 
place  as  in  another. 

We  have  in  our  American  commonwealths  far  better 
opportunity  to  establish  a  satisfactory  system  of  taxation 
than  exists  in  any  European  state,  where  tradition,  special 
privileges,  and  old  customs  impose  fetters  on  the  freedom  of 
movement,  and  there  is  no  reason  why  Maryland,  where  the 
need  of  financial  reform  is  generally  and  keenly  felt,  should 
not  strike  out  boldly  and  be  the  state  to  lead  all  others  in 
the  establishment  of  a  sound  system  of  taxation. 


PART   IV. 

CONSTITUTIONAL   PROVISIONS,   STATIS- 
TICAL INFORMATION,  AND  MIS- 
CELLANEOUS MATTER, 


CONSTITUTIONAL  PROVISIONS. 


I.— GENERAL  REMARKS. 


THE  tables  appended  will  enable  the  reader  to  survey 
the  vast  number  of  constitutional  restricliuns '  upon 
the  freedom  of  slates  and  cities  in  financial  matteis.  It 
must  be  remembered  that  these  tables  exhibit  only  those 
restrictions  which  spring  from  the  slate,  whereas  the  inter- 
ference on  account  of  the  judicial  interpretations  of  the 
federal  constitution,  to  which  allusion  has  already  been 
made,  are  very  numerous. 

What  shall  be  said  of  all  these  restrictions  upon  the  liberty 
of  movement?  It  is  impossible  to  enter  into  any  lengthy 
disquisition  on  constitutional  law  in  this  place,  but  attention 
must  be  called  to  a  few  main  facts. 

Matter  is  placed  in  constitutions  wliich  properly  belongs 
in  statutes,  for  the  purpose  of  constitutions  is  to  lay  down 
the  main  lines  of  legislative  action,  and  not  to  dispense  with 
legislation.  The  result  is  great  uncertainty  as  to  the  validity 
of  law  and,  in  consequence,  expensive  litigation,  which  the 
public  find  irritating.  It  is  calculated  to  undermine  the 
foundations  of  good  government,  by  destroying  respect  for 

'ThcM  (able*  are  baaed  on  thai  excdlenl  work.  Slimsun'a  "American 
Statule  Law,"  and  on  Poole's  "  I  harlers  and  Conslitu lions,"  piibtiahed 


376 


CONSTITUTIONAL   PROVISIONS. 


law.'  Constitutions  become  ao  complicated  that  no  one 
knows  what  they  mean.  T!ie  sovereign  people  set  up  a 
written  instrument  of  which  they  do  not  comprehend  the 
meaning,  as  supreme  ruler  over  them.  The  effect  is  to 
place  them  at  times  in  a  condition  worse  than  that  of  sub- 
jects of  an  absolute  czar.  The  latter  can  be  entreated  to 
listen  to  reason ;  the  constitution  must  be  obeyed,  right  or 
wroi\g,  until  it  can  be  changed,  and  to  effect  a  change  is  a 
long,  tedious  process,  often  indeed  an  impossibility,  unless 
the  majority  in  favor  of  the  change  is  an  overwhelmingly 
large  one.  Mr.  Henry  Hitchcock  in  his  essay  on  "  Ameri- 
can State  Constitutions  "*  calls  attention  to  the  fact  that  a 
temporary  majority  may  impose  their  will  for  some  time  on 
the  people  of  a  state  by  securing  the  incorporation  of  their 
peculiar  views  in  the  state  constitution.  He  does  not,  how- 
ever, it  seems  to  me,  appreciate  the  grave  nature  of  the 
danger.  Views  change,  and  legislative  requirements  change  ; 
but  if  constitutions  enter  into  details,  a  vast  majority  of  the 
people  may  on  the  one  hand  become  the  slaves  of  the  dead, 
and  on  the  other  they  raay  be  ruled  by  a  small  but  deter- 
mined minority  which  finds  profit  in  governmental  inii>erfec- 
tions.  Mr.  Hitchcock  refers  to  the  proposition  of  Sir  Henry 
Maine,  that  when  law  becomes  written  and  codified,  its 
"spontaneous  development  ceases  ;  that  the  changes  there- 
after effected  in  it  are  effected  deliberately  and  from  with- 
out ;  and  that  from  the  moment  when  their  laws  artf'  thus 
embodied  in  some  permanent  record  the  stationary  condi- 

>  On  Ihe  entire  «u1ijecl  of  slile  conititiition*,  the  reader  will  do  well 
to  coniult  Ibe  exceltenl  monogcsph  of  Dr.  J.  Franklin  Jameioa,  ei>> 
lilled  "An  Inlroductiun  to  Ihe  Study  of  the  Cunstiiulionsl  >  d  Political 
History  of  the  Stales,"  published  in  the  Johns  Hopkins  Univcnitjr 
Studies  in  Ilistotital  snd  Pulitical  Science,  Volume  IV.,  No.  V, 

'  New  York.  iSSj. 


\ 


COXSTITUTIONAL  FFOV!SlO<\'S.  377 

tion  of  the  human  race  is  the  rule,  the  progressive  the 
exception."  Mr.  Hitchcock  quotes  these  words  from  Sir 
Henry  Maine  :  "  With  respect  to  them  [progressive  socie- 
ties] it  may  be  laid  down  tha.C  social  necessities  Eind  social 
opinion  are  always  more  or  less  in  advance  of  Uw.  We  may 
come  indefinitely  near  the  closing  of  the  gap  between  them, 
but  it  has  a  perpetual  tendency  to  reopen.  Law  is  stable  ; 
the  societies  we  are  speaking  of  are  progressive.  The 
greater  or  less  happiness  of  a  people  depends  on  the  degree 
of  promptitude  with  which  the  gulf  is  narrowed."  Mr- 
Hitchcock,  however,  mentions  the  large  number  of  new 
state  constitutions  and  constitutional  conventions,  and  seems 
inclined  to  agree  with  Mr,  James  Russell  Lowe!)  in  the 
belief  that  our  constitutions  stand  "  not  in  the  way  of  the 
people's  will,  but  of  their  whim,"  The  fact  that  most  of 
the  recent  constitutional  conventions  were  the  outcome 
of  a  civil  war  seems  to  be  overlooked,  as  does  the  fact 
that  a  growing  and  inliuential  class,  profiting  by  the  ab- 
i  of  power  on  the  part  of  the  representatives  of  the 
people,  are  determined  thai  constitutional  conventions  shall 
not  be  held.  When,  according  to  the  requirements  of  the 
constitution  of  New  York,  the  people  of  the  state  two  years 
ago  were  asked  to  signify  their  wishes  with  respect  to  a  con- 
stitutional convention,  a  majority  vote  in  its  favor  was  given. 
Special  interests,  however,  were  opposed  to  the  constitu- 
tional convention,  and  law  and  constitution  have  to  this  day 
been  set  at  defiance.  Moreover,  as  Professor  Alexander 
Johnston  has  shown,  it  now  seems  probable  that  a  federal 
constitutional  convention  is  forever  an  impossibility. 

It  is  said  that  the  people,  the  sovereigns,  retain  the  pow- 
ers, not  delegated.  This  is  a  superstition  worthy  to  rank 
with  the  voodooism  of  the  negroes  of  New  Orleans.  Power 
not  delegated  to  the  legislature  cannot  be  exercised  by  the 


378  CONSTITUTIONAL   PROVISIONS. 

people.  Take  the  case  of  Maryland,  interested  in  the 
Chesapeake  and  Ohio  Canal.  The  constitution  does  not 
allow  the  legislature  to  use  any  money  for  the  construction 
of  internal  improvements,  or  even  for  their  maintenance. 
The  slate's  investment  in  this  enterprise,  according  to  the 
last  comptroller's  report,  amounts  to  S^S, 574, 713-551'  yet 
not  one  cent  can  be  spent  to  save  this  large  property.  The 
people  h-ive  not  retained  the  power  to  regulate  their  own 
affairs.  They  have  virtually  given  the  control  of  the  canal 
to  railroad  corporations  which  can  borrow  money  for  their 
purposes.  The  power,  which,  according  to  popular  illusion 
was  retained,  has  been  transferred  to  private  corporations. 

This  excess  of  constitutionalism  seems  to  me  dangerous 
because  it  tends  to  produce  a  fossilization  of  laws  and  institU' 
lions.  Conservatism  is  excellent,  but  it  must  be  remembered 
that  the  only  possible  kind  of  conservatism  is  constructive 
conservatism.  We  have  had  one  China  in  the  world's  his- 
tory, but  another  is  impossible.  Stationary  conservatism,  so 
called,  is  destructive  and  revolutionary. 

The  application  of  what  has  been  said  to  the  matter  of 
taxation  is  sufficiently  obvious.  A  simplification  of  consti- 
tutional provisions  is  a  necessary  accompaniment  of  any 
sound  reform  of  state  and  local  taxation.  While  it  is  desira- 
ble that  some  general  principles  for  the  guidance  of  legisla- 
ture should  be  laid  down,  it  is  difficult  to  see  how  states  like 
Massachusetts  and  New  Hampshire,  which  have  not  been 
hampered  by  constitutional  restrictions  in  regard  to  taxation, 
have  as  a  matter  of  fact  suffered  thereby.  It  is,  however, 
certain  that  excessive  constitutionalism  does  harm.  Let  us 
again  turn  to  Maryland.  The  sessions  of  the  legislature  arc 
biennial  and  limited  to  ninety  days.  Formerly  it  was  said 
that  the  legislative  sessions  were  excessively  long  because  the 
1  Flincipal,  f  7,000/xxi;  inleiest,  $18,574,713.55. 


coNsriTurroNAi-  pnoyisioss.  379  1 

members  wanted  their  {5  a  day.  It  was  said  that  too  many 
local  and  private  laws  were  passed.  All  these  complaints  were 
undoubtuilly  well  founded.  We  suffer  from  too  much  legisla- 
tion, but  to  part  with  power  caimot  efferi  a  cure.  As  to  the 
pay  of  the  legislature,  that  difficulty  can  be  solved,  as  it  has 
been  in  New  York,  by  paying  each  member  a  fixed  sum  per 
year,  regardless  of  the  length  of  the  session.  Local  and 
private  bills  are  brought  forward  still,  and  consume  most  of 
the  ninety  days.  Bills  in  the  general  interest  are  likely  to 
suffer.  Good  laws  can  be  put  off,  by  means  of  the  lobby, 
until  it  is  loo  late  to  pass  them.  Bad  laws  can  be  passed 
without  notice  in  the  hurry  and  excitement  of  the  last  days 
of  the  sessions  which  have  not  inaptly  been  compared  to  the 
"close  of  a  Pimlico  race,  when  it  is  difficult  to  tell  what 
horses  have  been  held  back  until  the  whip  and  spur  are 
plied  at  the  critical  moment,  .  .  .  Certain  measures  of  at 
least  doubtful  propriety  are  pushed  to  the  front  when  it 
is  too  late  to  expose  them  and  centre  upon  them  the  public 
gaze  and  disapprobation." ' 

The  ninety-day  limitation  also  tends  to  make  extremely 
difficult  any  radical  improvement.  The  abuse  of  local  legis- 
lation ought  to  be  remedied  by  a  large  and  generous  but 
properly  guarded  grant  of  powers  to  local  political  units. 
Now  Marj'land  cities  and  counties  have  no  independent 
financial  existence.  A  Maryland  city  cannot  even  construct 
water-works  without  a  petition  to  the  legislature  and  legisla- 
tive sanction.  Self-help  is  unknown,  and  local  self-govern- 
ment exists  in  a  most  imperfect  form.  We  are  kept  dangling 
on  die  apron-strings  of  our  Annapolis  nurses.  What  is  true 
of  Mar>-land  is  true  of  other  states.  Mayor  Hewitt,  like 
every  honest  man  who  has  given  attention  to  the  municipal 
government  of  New  York,  finds  that  one  of  the  first  con- 
<  Batlimore  Sun,  edilonat,  March  iz,  iSSS. 


J 


CONSTITUTIONAL   PROVISIONS. 


ditions  of  good  administration  is  a  cessation  of  perpetual 
legislative  iolerference  in  local  affairs.  This  must,  however, 
continue  until  larger  powers  of  local  self-government  are 
granted.  But  to  draw  up  and  adequately  discuss  a  proper 
bill  for  local  administration  in  Mar)'iand  would  require  well- 
nigh  the  entire  ninety  days  of  the  constitutional  session. 
An  imperative  need  in  Maryland  is  tax  refonn  ;  but  to  dis- 
cuss properly  so  large  a  topic  as  a  new  system  of  taxation 
for  the  state  and  all  the  local  political  units  would  require 
full  ninety  days,  l-ocal  powers  are  so  limited  thai  a  Mary- 
land cily  cannot  even  order  an  assessment  of  property  for 
local  purposes  without  legislative  authorization  t  We  have 
not  had  an  assessment  of  property  since  1876,  and  many  who 
have  since  then  entered  the  city  of  Baltimore,  or  acquired 
wealth,  pay  Utdc  or  no  taxes,  while  the  rate  for  1888  on  old 
tax-payers  for  city  and  state  purposes  in  Baltimore  is  Ss-oyjf 
on  the  fioo  — a  very  high  rate,  because  a  good  deal  of  the 
Baltimore  improved  real  estate  is  assessed  for  its  full  value,  and 
many  small  houses  for  considerably  more  than  they  could  be 
Bold  for.  Those  who  escape  taxation  oppose  any  new  assess- 
ment, and  for  this  our  constitution  offers  them  every  facility. 
I  protest  that  here  is  a  case  in  which  a  constitution  places 
an  obstacle  in  the  way  not  of  the  whim  of  the  people,  but  dL 
their  will,  and  I  venture  to  assert  that  such  cases  will  in  a 
near  future  become  very  frequent. 

We  talk  much  about  local  self-government,  but  in  all  finan- 
cial matters  we  have  less  of  it  than  the  local  political  units 
of  any  of  the  great  European  nations.  It  is  a  general  princi- 
ple in  Germany  and  France  that  cities  have  all  powers  which 
have  not  been  expressly  taken  away  from  them.  Our  prind- 
pic  of  law  is  that  cities  have  only  those  powers  which  have 
been  expressly  granted.  The  English  theory  is  Ukc  the 
American,  but  the  grant  of  powers  to  English  cities  has 


CO^■STlTVTIONAL  PJiOVfSIOl^S. 


381 


been  so  generous  that  the  English  practice  is  essentially 
difTerent  from  ours. 

It  is  hard  not  to  believe  that  one  reason  for  the  better  gov- 
emtnent  of  European  cities  is  their  responsibility,  their  self- 
determination,  their  self-conlrol,  their  relative  independence 
from  outside  interference.  The  following  newspaper  sum- 
mary of  the  local  government  bill  for  the  government  of 
counties  in  England  and  Wales,  inlroduced  in  the  English 
House  of  Commons  on  March  19,  1S88,  will  show  how 
much  greater  the  degree  of  liberty  to  which  the  English 
have  become  accustomed  in  local  matters  than  we  know 
anything  about :  — 

"The  bill  proposes  to  establish  coimty  councils,  to  be 
elected  directly  by  rate-payers,  which  are  to  have  control 
of  the  county  police,  to  wield  the  powers  now  exercised  by 
the  local  authorities  over  gas  and  water  works,  artisans' 
dwellings,  the  sale  of  food  and  drags,  and  sanitary  condi- 
tions, and  to  make  advances  in  the  aid  of  emigration  when 
there  is  reason  to  believe  that  the  advances  will  be  repaid. 
The  local  government  board  is  to  retain  its  present  power 
to  control  the  borrowing  of  money  by  the  counties,  and  to 
audit  the  account  of  counties,  and  is  also  to  fix  the  number 
of  members  of  the  county  councils.  Other  provisions  give 
the  councils  ihe  oversight  of  lunatic  asylums,  work-houses, 
reformatories,  and  industrial  schools,  and  power  to  grant 
licenses  for  the  sale  of  intoxicating  liquors." 

H  may  be  said  that  excessive  constitutionalism,  as  devel- 
oped in  our  states,  leads  to  hasty  and  ill -considered  legis- 
lation. If  the  courts  have  large  powers  of  nullification,  they 
are  relied  upon  to  defeat  vicious  legislation.  People  become 
careless  and  indifferent.  A  class  of  men  among  us  give 
enough  concern  to  government  to  secure  the  insertion  of 


382  CONSTITUTIONAL  PROVISIONS. 

limitations  to  debts  and  taxation  in  constitutions  and  laws, 
and  tlien  neglect  all  the  duties  of  citizenship. 

It  may  be  said,  If  we  give  Urge  powers  to  cities  lo  engage 
in  enterprises  like  the  construction  of  gas-works,  water-works, 
electric-light  works,  and  the  Uke,  they  will  be  reckless  in  the 
use  of  them,  or  they  may  even  start  on  the  road  to  socialism. 
I  reply,  that  good  local  government  cannot  be  found  any- 
where apart  from  local  liberty,  and  that  the  smalt  advances 
we  have  made  in  this  respect  in  American  states  have  not  pro- 
duced such  results  as  to  discourage  us.  There  was  a  lime  when 
the  county  authorities  in  Maryland  could  not  give  relief  to  a 
poor  person  mitil  a  special  bill  for  that  particular  person 
was  passed  by  the  legislature.  It  led  only  to  abuse,  and  it 
yet  remains  to  show  that  a  single  step  taken  in  the  direction 
of  local  liberty  has  failed  to  produce  good  results. 

The  cry  about  socialism  whenever  a  municipality  con- 
structs and  operates  gas-works,  water-works,  or  even  street- 
car lines,  is  scarcely  worthy  the  attention  of  sensible  men. 
A  tendency  to  socialism  can  be  said  to  exist  only  where 
there  is  a  movement  looking  to  the  absorption  of  all  business 
by  government.  If  government  business  is  separated  from 
private  by  well-drawn  lines,  and  natural  monopolies  are 
transferred  to  our  various  governments,  it  cannot  be  said 
that  that  reveals  any  tendency  to  socialism.  This  so-called 
tendency  exists  only  in  the  vivid  imaginations  of  timid  and 
purely  speculative  thinkers.  Those  who  imagine  that  our  poli- 
ticians show  any  inclination  to  extend  the  sphere  of  govern- 
ment business  must  stand  very  far  from  the  facts  of  our  life. 
Professor  Simon  Newcomb,  in  his  "  Political  Economy," 
distinguishes  very  properly  between  the  "  keep-out  "  princi- 
ple and  the  "  let-alone  "  principle.  The  keep-out  principle 
means  that  government  itself  should  not  go  into  any  business, 
Ttw  let-alone  principle  or  maxim  means  that  government 


CONSTITUTIONAL  PROVISIONS. 


3S3 


should  let  people  alone  in  the  managemenl  of  their  affairs. 
What  politicians  are  doing  is  ia  violation  of  the  let-alone 
maxim.  Their  interference  with  private  affairs  is  far-reach- 
ing and  tends  to  demoralization.  It  is,  in  some  respects, 
perhaps,  alarming.  They  will,  however,  violate  the  keep- 
out  principle  only  when  compelled  to  do  so  by  strong  pres- 
sure from  the  people.  They  are  far  more  inclined  to  inter- 
fere with  gas  companies  than  to  establish  gas-works,  or  to 
regulate  the  management  of  telegraph  companies  than  to 
purchase  the  rights  of  companies  already  existing.  With 
what  affectation  of  rigiiteous  indignation  did  the  aldermen  of 
Chicago  resist  a  proposition  which  has  much  to  commend 
it,  —  that  the  city  should  take  steps  looking  to  the  ultimate 
acquisition  of  street-car  lines  by  the  city.  They  were  not 
socialists  !  they  wanted  that  understood  !  Municipal  coun- 
cils and  politicians  are  too  much  inclined  to  part  with  public 
property  and  abandon  public  enterprises.  This  is  the  only 
real  danger.  It  was  the  politicians  who  wanted  to  sell  the 
Philadelphia  gas-works,  and  it  was  a  strong  expression  of  pop- 
ular will  which  defeated  the  ring.  Special  Interests,  always 
dominant,  are  opposed  to  extension  of  government  enter- 
prise, and  they  are  so  powerful  ihat  such  extension  can  never 
take  place  unless  there  are  the  strongest  reasons  therefor. 

The  few  general  provisions  of  a  con.stitution,  it  seems  to 
me,  should  protect  coming  generations  against  extravagance 
and  misuse  of  power  on  the  part  of  the  present ;  should, 
while  not  obstructing  action,  prevent  hasty  action,  secure  full 
publicity,  and  provide  for  frequent  reference  of  financial 
measures  to  the  people  for  approval.  The  organic  law 
ought  further  to  provide  general  regulation  for  municipal 
corporations  of  such  a  nature  as  to  bring  about  a  larger 
co-operation  of  business  men  in  the  practical  affairs  of  gov- 
ernment, through  the  means  of  boards  of  trade,  merchants' 


384  CONSTITUTIONAL  PROVISIONS. 

and  manufacturers'  associations,  and  like  organizations,  and 
of  citizens  generally  by  means  of  numerous  unpaid  And  ral* 
untaiy  commissions.  Out  people  stand  loo  far  from  the 
practical  work  of  government.  Berlin  is  said  to  be  tfae 
best  governed  city  in  the  world.  Perhaps  two  of  the  chief 
reasons  for  this  may  be  found  in  Its  large  degree  of  liberty,  or 
local  self-government,  and  in  Its  unpaid  commissions,  ihroagh 
which  substantial  citizens  co-operate  with  paid  officials  in 
every  part  of  the  government.  It  is  said  that  ten  thousand 
people  thus  participate  in  the  affairs  of  local  govemmenl  in 
Berhn.  Provision  should,  in  such  cases,  be  made  for  the  pir- 
ticipation  of  women  in  the  work  of  school  comraisBioni  a&d 
poor-relief  commissions.  It  is  of  real  importance  lo  the  peo- 
ple of  the  entire  state  that  no  city  or  other  local  tinit  tbnuld 
become  banknipt  or  impoverished,  Legislat 
may  properly  be  retjuired  for  extraordinary  and 
expenditures,  such  as  would  bring  the  total  debt  above,  ay, 
ten  or  fifteen  per  cent,  of  the  total  value  of  the  property 
of  the  city.  It  is  best,  as  a  rule,  to  refer  expcnditi 
the  people  for  indorsement,  and  to  let  them  within  | 
limits  govern  themselves  and  take  the  consequences  of  |] 
own  acts. 

The  remainder  of  this  chapter  was  prepared  with 
reference  lo  Maryland,  but  It  is  believed  it  will  be  found 
general  imiK>rtance. 

It  is  recommended  that  the  legislature  submit  to  the 
an  amendment  to  the  constitution  repealing  that  provi 
of  the  constitution  which  forbids  all  participation  of  the 
treasury  in  imernal  improvements,  and  ihat  in  place  ihci 
it  be  provided  that  internal  improvements  W  undertaken  imJv 
af^er  an  an  of  the  legislature  authorizing  them,  he  approred 
by  the  people  by  a  majority  vote.  'ITie  people  of  the 
can  no  longer  afford  to  treat  themselves  as  children ; 


1 


CONSTITUTIONAL   PROVISIONS. 

unless  Ihey  learn  to  trust  themselves,  the  state  will  continue  I 
to  dwindle  in  iraporiance  between  the  federal  government 
on  the  one  hand,  and  municipal  and  private  corporations  on 
the  other.  Without  borrowing  powers  and  a  larger  degree 
of  liberty  in  general  the  people  of  the  state  can  never  resist 
successfully  vast  corporations.  Every  constitutional  enact- 
ment is  a  restriction  upon  the  liberty  of  action,  —  and  re- 
strictions should  be  few  and  simple,  —  indicating  the  main 
lines  of  legislation,  and  preventing  rash  action.  Where  cor- 
ruption may  be  feared,  provision  should  be  made  for  approval 
by  popular  vote  to  make  legislative  action  valid. 

This  has  special  reference  to  the  Chesa|>eake  and  Ohio 
Canal,  There  seems  to  be  need  of  some  one  lo  do  for 
Maryland  with  reference  to  that  canal  what  the  Demo- 
cratic statesman,  Horatio  Seymour,  of  New  Vork,  did  for 
the  Erie  ;  namely,  settle  the  question  al  once  and  forever 
in  favor  of  state  ownership,  and  make  the  tolls  as  low  as 
possible,  if  they  cannot  be  abolished,  as  in  New  York  state. 
A  canal  cannot  be  expected  tc  derive  a  profit  from  tolls  any 
more  than  highways  ought  to  be  expected  to  yield  a,  profit. 
Yet  to  the  people  at  large  the  enterprise  is  profitable  in 
reducing  freight  rates  and  in  carrying  freight,  for  the  time 
of  the  canal  has  not  yet  passed,  and  it  is  eminently  suitable 
for  certain  kinds  of  freight.  This  is  pertinent  to  the  subject 
of  taxation,  for  thereby  we  may  hope  that  the  industries  of 
the  slate  will  increase  in  prosperity,  the  taxable  basis  be 
raised,  and  the  rate  of  taxation  lowered. 

It  is  idle  to  talk  about  taking  the  canal  "  out  of  politics," 
if  that  means  turning  it  over  to  private  parties ;  or  will  some 
one  tell  me  that  private  railroad  corporations  are  "out  of 
politics"?  Are  they  not  indeed  in  politics  more  thoroughly 
than  any  state-owned  railroads,  and  often  in  politics  in  a 
more  demoralizing  way  than  our  canals  are  al  present.     To 


386  CONSTITUTIONAL  PROVISIONS. 

turn  the  canal  over  to  private  parties  is  equivalent  ti 
it  over  to  a  railroad  corporation  for  destruction  of  its  value 
to  the  injury  of  the  people  of  Maryland.  This  has  happened 
time  and  time  again  in  our  various  states.  Canals  can  exist 
only  as  slate  enterprises.  England  put  her  canals  "  out  of 
politics,"  and  now  it  is  a  live  question  there  to  know  how 
to  gel  the  canals  out  of  railroad  corporations.  If,  to  put  the 
Chesapeake  and  Ohio  Canal  out  of  politics  means  earnestly  to 
attack  the  problem  of  gopd  administration,  and  to  prevent 
its  manipulation  for  party  ends,  then  certainly  it  ought  to 
lie  taken  out  of  politics,  and  this  is  perfectly  practicable  by 
regulating  conditions  of  appointment,  tenure  of  oflice,  and 
dismissal  from  office.  Business  men.  Ihrough  their  cham- 
ber of  commerce  and  merchants'  and  manufacturers'  asso- 
ciations, and  farmers  through  some  of  their  associations, 
might  be  authorized  to  elect  most  of  the  directors,  the  gov- 
ernor to  appoint  one,  and  all  appointments  to  be  for  six 
years,  one-third  retiring  each  two  years.  Some  such  arrange- 
ment as  this,  with  rules  drawn  upon  business  principles  to  gov- 
ern the  directors  in  iheir  relations  to  employes,  would  forever 
take  the  Chesapeake  and  Ohio  "out  of  politics,"  in  the  bad 
sense  of  the  word.  It  is  perfectly  practicable,  because  it  is 
a  thing  which  has  been  done  elsewhere.  Here  is  a  grajid 
opportunity  for  the  right  man  to  render  distinguished  ser- 
vice to  Maryland. 

As  soon  as  the  question  is  once  settled  in  favor  of  state 
ownership  of  the  Chesapeake  and  Ohio  Canal,  its  business 
will  improve  immensely.  Ohio  has  passed  through  the 
same  experience,  and  the  governor  reports  on  the  subject  as 
follows  in  his  annual  message,  dated  January  4,  1887,  after 
showing  from  the  report  of  the  Board  of  Public  Works  a 
gain  of  ^30.559. 73,  as  compared  with  their  report  of  the 
preceding  year :  — 


CONSTITUTIONAL  PROVISIONS. 

"  This  gratifying  result  is  due  very  largeiy  to  Ihc  hope 
that  has  been  revived  in  all  who  are  interested  in  the  canals, 
that  they  are  not  to  be  abandoned  or  allowed  to  fall  into 
decay  and  disuse.  They  constitute  a  valuable  public  prop- 
erty. The  state  should  not  dispose  of  any  part  of  them. 
On  the  contrary,  it  should  be  made  distinctly  the  policy  of 
the  state  to  improve  and  uphold  them.  When  this  becomes 
well  understood,  the  result  will  be  that  business  ufion  and 
along  them  will  be  revived ;  new  boats  will  be  built,  and  their 
great  benefits  ivill  be  made  each  year  more  apparent." 

A  canal  ought  to  be  entirely  public  property,  and  it  is  said 
that  for  a  very  moderate  sum  the  claims  on  the  Chesapeake 
and  Ohio  Canal,  which  are  prior  to  the  claims  of  the  state, 
could  be  purchased.  If  it  would  take  a  million  and  a  half  to 
cancel  all  those  claims,  a  long-time  four  per  cent,  loan  would 
cost  us  only  a  little  over  56o,ooo  a  year,  and  would  be  offset 
by  increased  valuation  of  property.  After  all,  how  small 
the  sum  is,  is  seen  in  the  fact  that  more  than  the  entire 
capital  required  was  raised  by  the  federal  income  tax  in 
Maryland  in  one  year  without  impoverishing  any  one.  It  is 
ridiculous  to  add  up  the  sums  which  have  been  spent  in  all 
the  years  past  on  the  canal,  as  if  they  were  lost.  It  has 
been  returned  already  to  the  people.  Baltimore  has  spent 
millions  upon  millions  on  her  streets,  and  expects  to  spend 
millions  more,  and  has  not  received,  and  does  not  desire  to 
receive  a  single  cent,  in  direct  returns.  These  expenditures, 
from  which  the  returns  come  indirectly  in  a  contented  and 
prosperous  commimity,  are  the  most  profitable  which  it  falls 
to  the  lot  of  a  community  to  make. 

Some  able  jurists  and  careful  economists  think  it  was  a 
grave  mistake  in  the  American  people  to  allow  their  great 
steam  highways  to  become  private  property.  However 
that  may  be,  it  is  the  least  that  can  be  demanded,  that  as 


JSa  CONSTITUTTONAL   PROVISIONS. 

a  partial  check  on  the  tremendous  power  thus  given  into 
private  hands  to  oppress  the  public,  other  highways,  canals 
included,  should  belong  to  the  public,  and  be  controlled  by 
its  agents  acting  under  civil  service  rules,  drawn  up  on 
business  principles.  Furthermore,  these  highways  ought  to 
be,  wherever  possible,  free  from  tolls. 

As  long  as  this  chapter  is,  aa  abstract  tnust  be  made 
from  a  letter  by  Horatio  Seymour,  dated  October  9,  i8Sa, 
in  favor  of  the  amendment  to  the  constitution  of  New  York, 
which  finally  passed  and  approved,  authorized  expenditures 
for  the  New  York  canals,  and  made  them  free.  "  It  has 
been  my  duly  in  the  course  of  my  life  to  investigate  the 
value  of  our  canals.  As  a  member  of  the  legislature,  as 
chairman  of  the  Canal  Committee,  and  in  messages,  I  have 
made  frequent  reports  and  statements  with  regard  to  them. 
I  have  no  interest  in  their  preservation,  except  my  anxiety 
to  promote  the  welfare  of  all  parts  of  the  slate,  and  the 
sympathy  I  feel  for  the  boatmen,  who  are  struggling  for  a 
livelihood  against  railroads.  No  class  of  men  have  served 
the  public  more  than  they  have,  by  keeping  down  charges. 
I  remember  the  discussions  with  regard  to  canals,  when  the 
Erie  and  Champlain  canals  were  made,  and  the  joyous 
celebrations  when  they  were  completed,  and  their  wonderful 
influence  upon  the  commercial  prosperity  of  the  state. 
Fears  were  felt  that  their  costs  would  increase  taxation  in 
the  sections  of  New  York  remote  from  their  chaimcls.  The 
result  was  the  reverse  of  this.  They  gave  such  growth  to 
the  cities  along  their  lines  that  taxation  upon  other  sections 
was  reduced.  ...  In  1842  the  question  about  our  canal 
policy  engaged  the  public  attention  more  than  any  other 
topic,  and  was  the  main  subject  of  discussion  in  our  legis- 
lature. I  then  became  convinced  that  the  revenue  they 
produced  was  of  very  httle  importance,  compared  with  the 


CONSTITUTIONAL  PROVISIONS.  389 

importance  of  cutting  down  the  cost  of  carrying  out  products 
to  the  markets  of  the  world.  I  dierefore  did  what  I  could 
to  aid  the  people  of  Northern  and  Southern  New  York,  in 
getting  canals  made  through  those  sections  of  the  state.  .  . . 
The  spirit  which  prompts  opposition  to  the  amendment  is 
best  expressed  by  words  which  import,  that  if  the  counties 
which  desire  free  canals  wish  to  have  ihem  made  so,  let 
them  pay  the  cost.  If  this  feeling  is  manifest,  to  what  end 
will  it  lead?  It  will  be  said,  in  return,  if  such  counties 
wish  to  have  their  schoob  supported,  '  let  them  pay  the 
costs,'  if  they  desire  that  their  members  of  the  legislature 
or  their  judiciary  should  receive  their  salaries,  let  them  pay 
costs  !  This  will  throw  upon  such  counties  a  great  sura  of 
taxation,  many  times  more  in  amount  than  their  shares  of 
making  free  canals.  I  deplore  a  result  which  would  go  so 
far  to  impair  the  honor  and  interests  of  New  York.  .  .  . 

"  When  we  break  down  the  protection  our  public  works 
^ve  us,  we  do  not  know  how  far  the  same  influence  may 
put  up  charges  upon  our  commerce  which  will  bring  distress 
upon  all  classes  and  upon  all  interests.  We  are  to  bear  in 
mind  that  the  directors  of  railroads  are  the  agents  and  trus- 
tees of  stockholders  of  their  corporations,  and  must  respond 
to  their  wishes,  which  are  apt  to  be  unreasonable  and  un- 
wise. .  .  .  Canals  are  not  made  for  the  sake  of  the  tolls  or 
taxation  which  they  may  draw  from  the  people ;  on  the 
contrary,  they  are  designed  for  the  common  benefit  of  all 
parts  of  the  state,  and  to  add  to  the  profits  of  farmers, 
mechanics,  and  other  producers,  by  cutting  down  the  cost 
of  getting  their  products  to  the  markets  of  the  world. 
Another  fact  should  be  stated,  which  shows  how  harshly  the 
Constitution  deals  with  its  own  canals  and  with  the  boatmen 
who  toil  upon  them.  If,  in  consequence  of  a  break  in  its 
banks,  or  of  a  desire  on  the  part  of  competing  routes  to 


390  COffSTITUTlOl^AL   PROVISIONS. 

destroy  them  and  the  persons  who  own  or  navigate  lioats, 
their  receipts  should  be  reduced  for  a  single  year  below  the 
cost  of  maintaining  them,  the  constitution  will  not  let  the 
legislature  vote  a  single  dollar  to  make  up  such  deficiency, 
no  matter  how  small  it  may  be.  This  hostile  and  menacing 
attitude  of  our  state  towards  canals  and  boatmen  prevenis 
the  building  of  vessels  and  their  use.  '  It  has  lessened  the 
receipts  for  tolls,  for  men  will  not  engage  in  a  business 
where  they  are  liable  to  be  ruined  by  an  accident  or  by  the 
designs  of  rich  competitors.  These  will  find  it  profitable  to 
carry  at  losing  rates  for  one  year,  if  they  can  destroy  forever 
the  boatmen  or  the  canals  which  keep  down  their  own  rates 
for  carrying  the  prodiicts  of  our  own  people.  When  they 
have  destroyed  their  compeiilion  they  can  ever  after  put  up 
their  own  charges  to  suit  their  own  interest.  If  relief  is 
sought  from  such  action,  their  agents  must  be  sent  into  the 
lobby  and  ex.cite  suspicion,  which  may  be  unjust,  thai  mem- 
bers are  corrupted.  When  these  suspicions  become  general, 
they  will  lead  to  disastrous  results." 

It  has  been  suggested  that  the  counties  through  which 
the  canal  passes,  might  without  constitutional  change  acquire 
the  Chesapeake  and  Ohio  Canal  and  improve  it.  It  would 
seem  that  all  parts  of  the  state,  like  all  parts  of  New  York, 
ought  to  be  benefited  by  a  wise  canal  policy.  Possibly 
some  counties  should  make  extra  contributions,  as  those 
persons  do  who  derive  most  from  streets  in  cities.  A 
"Union  for  the  Improvement  of  Canals  of  the  State  of 
New  York."  with  headquarters  in  New  York  City  has  been 
formed.     Maryland  might  well  follow  this  example. 

It  is  conceivable  that  some  special  and  peculiar  reasons  ex- 
ist why  an  exception  to  the  general  rule  should  be  made  with 
respect  to  the  whole  or  portion  of  the  Chesapeake  and  Ohio 
Canal  and  the  whole  or  part  of  it  be  leased  for  a  percent^e 


CONSTITUTfO.VAL   PKOVIS/O.VS. 


391 


I 


of  gross  revenues  to  a  railroad  company.  The  considerations 
here  adduced  deserve  careful  attention,  however,  and  it  may 
be  well  to  give  attention  to  plans  for  the  extension  of  the  canal 
to  Baltimore.  I  have  the  testimony  of  one  of  the  most 
competent  of  the  United  States  engineers,  a  gentleman  of 
unquestioned  integrity,  as  to  the  value  of  the  canal  to  Mary- 
land, and  no  hasty  policy,  afterwards  to  be  regretted,  ought 
to  be  pursued. 

Constitutional  provisions  ought  to  be  made  against  any 
irreparable  grants  of  exemption  from  taxation,  and  against 
the  grant  of  any  power  or  privilege  whatsoever  to  a  corpora- 
tion without  reserved  rights  of  repurchase  of  all  cor[K>rale 
property  of  every  description  by  exercise  of  the  right  of 
eminent  domain. 

Many  old  charter  exemptions  from  taxation  exist  in  Amer- 
ican states  and  cities,  and  they  are  a  perpetual  source  of 
annoyance  and  irritation.  It  may  be  said  that  they  are 
dangerous  to  existing  social  institutions,  because  they  tend 
to  lead  to  indiscriminate  attacks  on  private  property.  Prob- 
ably the  most  serious  case  of  the  kind  in  the  United  States 
is  the  exemption,  by  the  state  of  Maryland  under  an 
constitution,  of  the  Baltimore  and  Ohio  Railroad  from  tax- 
ation. Some  hold  that  such  exemptions  are  a  violation  of 
the  fundamental  rights  of  the  people  j  that  no  legislature, 
under  any  circumstances,  can  part  with  a  sovereign  right 
like  that  of  taxation  for  future  generations.  It  is  upheld 
by  Ihc  Dartmouth  College  decision,  which  has,  however, 
always  met  with  disapproval  on  the  part  of  many  learned 

The  Baltimore  and  Ohio  exemption,  which  is  certain  to 
play  a  disagreeable  and  demoralizing  part  in  Maryland  poli- 
tics as  long  as  it  exists,  has  led  one  of  the  Maryland  con- 
Mr.  McComas,  to  introduce   iq    the    House    of 


392 


CONSTITUTIONAL   FROVISrOMS, 


Representatives  the  following  proposed  amendment  to  the 
Constitutiun  of  the  United  States:  "Whereas,  a  legislative 
body  sitting  under  a  state  constitution  has  no  right  to  sell, 
give,  or  to  bargain  away  forever  the  taxing  power  of  a  state, 
or  by  contract  to  deprive  the  state  forever  of  the  power  of 
taxation,  and  thus  destroy  the  government  which  it  was 
appointed  to  serve  ;  and 

"  Whereas,  in  the  principle  long  approved  by  the  Supreme 
Court  of  tlie  United  States,  no  hindrance  can  be  seen  to 
rich  corporations  making  contracts  with  legislatures  as  they 
best  may,  for  perpetual  exemption  from  all  the  burdens  of 
supporting  the  government ;  and 

"  Whereas,  the  result  of  such  a  principle,  under  the  grow- 
ing tendency  to  special  and  partial  legislation,  is  to  exempt 
the  rich  from  taxation,  and  cast  all  the  burden  of  the  sup- 
port of  government  and  the  payment  of  its  debts  on  those 
who  are  too  poor  or  too  honest  to  purchase  such  immunity  ; 
and 

"  Whereas,  in  many  states  of  the  Union  favored  corpora- 
tions now  enjoy  this  immunity  from  taxation  upon  many 
millions  of  dollars'  worth  of  property,  rapidly  multiplying 
in  value,  but  perpetually  free  from  taxes  paid  by  the  people. 
Therefore, 

"  Resolved,  etc.,  that  the  first  clause  of  section  ten,  ^ti- 
de one,  shall  be  so  amended  as  to  read  as  follows :  — 

" '  No  state  shall  enter  into  any  treaty,  alliance,  or  con- 
federation ;  grant  letters  of  marque  and  reprisal ;  coin  money  ; 
emit  bills  of  credit ;  make  anything  but  gold  and  silver  coin 
a  tender  in  payment  of  debts ;  pass  any  bill  of  attainder,  ex- 
post-fatto  law,  or  law  impairing  the  obligation  of  contracts ; 
or  grant  any  title  of  nobility :  Provided,  however.  That  no 
state  shall  be  precluded  by  the  grant  of  any  charter 
of  incorporation  from  taxing  the  capital  stock  or  proper^ 


I 

open;   ^1 


L 


CONSTITVTIOffAL   PROVISIONS.  393 

of  such  corporation ;  nor  shall  any  charter  or  act  of  incor- 
poration heretofore  granted,  or  that  may  hereafter  be  granted, 
by  any  stale  be  construed  to  preclude  the  state  from  the 
power  of  taxation ;  but  the  states  shall  have  and  retain  the 
full  power  and  right  of  taxation  as  if  the  prohibition  to  pass 
laws  impairing  the  obligation  of  contracts  had  never  been 
incorporated  in  this  Constitution.'  " 

The  proper  method  is  so  to  shape  our  Constitution  that 
the  exemption  of  corporations  may  be  purchased  by  exercise 
of  the  right  of  eminent  domain,  like  real  estate,  and  thus  to 
acquire  all  exemptions  at  a  fair  price.  It  is  far  better  for 
corporations  that  some  such  arrangement  as  this  should  be 
made.  The  exemption  of  the  Baldmore  and  Ohio  Railroad 
Company  from  taxation  works  injury  to  the  corporation  itself 
in  many  ways.  Other  countries  have  already  purchased  most 
exemptions  like  this,  and  that  we  have,  in  the  United  States, 
made  no  beginning  in  this  direction  simply  shows  how  far 
we  have  lagged  behind  others  in  matters  of  taxation. 

The  following  provisions  of  the  constitution  of  Pennsyl- 
vania are  to  be  heartily  commended  as  a  move  in  the  right 
direction :  — 

"Section  i.  All  existing  charters  or  grants  of  special  or 
exclusive  privileges,  under  which  a  dona  fiih  organization 
shall  not  have  taken  place,  and  business  commenced  in 
good  faith,  at  the  time  of  the  adoption  of  this  constitution, 
shall  thereafter  have  no  validity. 

"Section  z.  The  General  Assembly  shall  not  remit  the 
forfeiture  of  the  charter  of  any  corporation  now  existing,  or 
alter  or  amend  the  same,  or  pass  any  other  general  or  special 
law  for  the  benefit  of  such  corporation,  except  upon  the 
condition  that  such  corporation  shall  thereafter  hold  its 
charter  subject  to  the  provisions  of  this  constitution. 

Section  3.  The  exercise  of  the  right  of  eminent  domain 


391  CONSTITUTIONAL   PROVISIONS. 

shall  never  be  abridged  or  so  construed  as  to  prevent  the 
General  Assembly  from  taking  the  property  and  franchises 
of  incorporated  companies,  and  subjecting  them  to  public 
use,  the  same  as  the  property  of  individuals  ;  and  the  exer- 
cise of  the  police  power  of  the  stale  shall  never  be  abridged 
or  so  construed  as  to  permit  corporations  to  conduct  their 
business  in  such  manner  as  to  infringe  the  equal  rights  of 
individuals  or  the  general  well-being  of  the  state."  —  Article 
XVI.,  sections  i,  a,  3,  Constitution  of  Pennsylvania,  1873. 

The  following  proposed  amendments  to  the  constitution 
of  Maryland  were  drawn  up  by  me  at  the  request  of  certain 
prominent  business  men  of  Baltimore.  They  are  partly 
taken  from  other  state  constitutions. 

1.  Abolition  of  this  part  of  Article  15  of  Declaration  of 
Rights,  viz. ;  "  But  every  person  in  the  state,  or  person  hold- 
ing property  therein,  ought  to  contribute  his  proportion  of 
public  taxes  for  the  support  of  the  government  according  to 
his  actual  worth  in  real  or  personal  property," 

It  is  proposed  that  the  following  provision  shall  be  substi- 
tuted for  the  above. 

2.  There  sliall  be  an  assessment  of  all  real  estate  within 
the  commonwealth,  taken  anew  once  in  three  years.  There 
shall  be  an  assessment  of  all  other  taxable  property  withia 
the  commonwealth,  taken  anew  once  every  year.  All  taxa- 
ble property  shall  be  assessed  at  its  full,  true,  selling  value, 
without  looking  to  a  forced  sale.  All  taxes  shall  be  uniform 
upon  the  same  class  of  persons  or  property  within  the  terri- 
torial limits  of  the  authority  laying  the  tax,  and  shall  be 
levied  and  collected  under  general  laws ;  but  this  shall  not 
be  understood  to  exclude  such  exemptions  of  property 
exceeding  in  value  ^1000,  or  of  annual  income  not  exceeding 
J600,  as  for  reasons  of  piiblic  policy  or  convenience 
General  Assembly  shall  see  fit  to  make. 


k 


I 

ty  ^H 

ceding    ^^| 
:e  the  ^H 


CONSTITUTIONAL  PROVISIONS. 


3.  Abolition  of  section  34  of  Article  3,  and  substitution 
therefor  of  what  follows  :  "  No  debt  shall  be  liereafier  con- 
tracted by  the  General  Assembly  unless  such  debt  shall  be 
authorized  by  a  law  providing  for  the  collection  of  an  annual 
tax  or  taxes  sufficient  to  pay  ihe  interest  on  such  debt  as  it 
falls  due,  and  also  to  discharge  the  principal  thereof  within 
thirty  years  from  the  time  of  contracting  the  same  ;  neither 
the  credit  nor  the  money  of  the  slate  nor  of  any  county, 
city,  or  other  local  political  unit  shall  be  given  or  loaned  to, 
or  in  aid  of,  any  private  corporation  or  of  any  private  under- 
taking whatsoever ;  nor  shall  the  General  Assembly  have 
the  power  in  any  way  to  involve  the  state  in  the  construction 
of  works  of  internal  improvement,  nor  in  granting  aid 
thereto,  which  shall  involve  the  faith  or  credit  of  the  state, 
except  on  condition  that  such  works  of  internal  improve- 
ment shall  be  indorsed  by  a  majority  of  those  voting  at  the 
next  regular  slate  election  or  at  special  election  provided 
for  this  purpose,  if  such  shall  be  ordered  by  the  General 
Assembly."  All  the  rest  of  section  34,  Article  j,  to  be 
stricken  out  as  useless  obstruction,  ample  safeguards  having 
been  already  provided. 

4.  Any  county,  township,  city,  or  other  municipality  in- 
curring any  indebtedness,  shall,  at  or  before  the  time  of  so 
doing,  provide  for  the  collection  of  an  annual  tax  sufficient 
to  pay  the  interest  and  principal  thereof  within  thirty  jears. 

.  Any  city,  town,  village,  or  county  in  this  common- 
wealth shall  have  power  to  construct  and  operate  gas-works, 
water-works,  electric -lighting  works,  and  street-car  lines,  or 
condemn  and  purchase  the  rights  in  such  enterprises  of 
existing  companies,  and  to  borrow  money  for  this  purpose 
under  conditions  elsewhere  provided  in  this  constitution. 
Whenever  use  is  not  made  of  this  power,  and  franchises  for 
any  of  these  purposes  are  sought,  and  it  is  decided  to  grant 


7 


396 


CONSTITUTIONAL  PROVISIONS. 


them,  then  these  franchises  shall  be  sold  at  public  auction 
for  a  period  not  exceeding  twenty-one  years ;  the  right  to 
repurchase  the  plant  at  the  expiration  of  the  period  of  the 
franchise  at  its  then  value  shall  be  reserved,  but  nothing 
shall  ever  be  paid  for  the  franchise  itself,  it  being  a  public 
grant,  the  value  of  which  belongs  to  the  public. 


The  material  presented  in  the  following  table  and  in  the  remain- 
ing pages  of  this  chapter  has  been  taken  for  the  most  part  from  a  work 
to  which  reference  has  already  been  made,  entitled  "  American  Statute 
Law,"  by  Frederic  J.  Stimson,  published  in  Boston,  1886.  In  this 
work  all  constitutional  provisions  in  force  January  i,  1886,  in  the 
various  states  are  given.  As  few  changes  have  been  made  in  state 
constitutions  since  that  date,  these  same  provisions  are  in  force  at 
present. 


i^tiOm   HO  23XAT 


^MOiTqMixa 


i  m  11 


hn.ffi 


I 


^^B^^^H 

W                 1 

^1                R3JS*X*T    .B3jqiaMlft«l  JAR1M30                                             ^^| 

^^iftlkWl      ,                                       1               AMA8AJ*  ^H 
^^^^BHB^                                                     .2A2MA>I«I«   ^I 
^^^^^^^K,     .      .                                     .AlHnOIIJAS   ^M 

^^^^^^^tt                                              TU3ITD3Htl03    ^M 
^^^^^^^tt                                                    JHAWAJjd    JH 
^^^^^^^K                                                   AOIflOJI    ^M 
^^^^^^^R>     «                                           AISnOBS    ^M 
^^^^^^^V                                                   ?IQI1UJI  ,^| 
^^^^^^^H                                                         .11AI0HI    ^M 

^W^^^^^l                                                 JlKAiaiUOJ    ^B 
^^^A^                                                                             3kllAM 

CONSTITUTIONAL  PROVISIONS. 


3.    ADDraONAl.  CONSTmmONAL  PROVISIONS. 

Slate  Finance  and  Taxation. 

The  provisions  here  added  could  not  well  be  tabulated, 
and  are  presented  best  in  this  form.  It  must  be  constantly 
borne  in  mind  that  the  following  notes  must  be  read  with 
the  table,  as  they  present  simply  additional  provisions,  and 
in  a  few  cases,  exceptions  lo  the  provisions  given  in  the 
table.  And  it  must  further  be  remembered  that  these  are 
simply  constitutional  provisions ;  the  statutory  can  not  well 
be  collected. 

General  PHiNaPLEs. 

A  provision  of  the  Vermont  constitution  has  already  been 
quoted  to  the  effect  that  the  purpose  for  which  the  tax  is 
levied  ought  lo  appear  of  more  importance  to  the  commu- 
nity than  the  money  would  be  if  not  collected,  before  any 
law  for  a  tax  be  enacted.  This  provision,  introduced  in 
1777,  is  still  in  force.  The  "state's  ancient  right  of  eminent 
domain  and  taxation  is  expressly  and  fully  conceded"  in 
the  constitution  of  Arkansas ;  and  in  that  of  Georgia,  taxa- 
tion is  declared  to  be  an  absolutely  inalienable  sovereign 
right  of  the  state. 

The  speciltcation  of  objects  and  subjects  of  taxation  shall 
.  not,  according  to  the  Illinois  constitution,  deprive  the  Gen- 
eral Assembly  of  the  power  to  tax  other  objects  or  subjects. 

Taxable  Peofehtt. 

Taxes  shall,  in  Michigan  and  Wisconsin,  be  "levied  upon 
such  properly  as  is  described  hy  law." 

Personal  property  of  a  resident  of  Maryland  shall  be  taxed 
where  he  resides  for  the  greater  part  of  the  year,  except 
where  goods  and  chattels  are  "  permanently  Ibcated  " ;  in 


398 


CONSTITUTIONAL  PKOVISIONS. 


Texas  and  California  all  properly,  except  rolling  stock, 
of  railroads,  is  assessed  where  situaled. 

In  California  land  and  improvements  thereon  are  j 
rately  assessed,  ail  mortgages  except  mortgages  by  railroadt 
etc.,  are  taxed  to  the  owner,  and  the  property  less  the  valiu 
of  the  mortgage  to  the  mortgagor,  all  contracts  i 
contrary  being  void.  It  is  provided  in  the  Texas  constitu 
tion  that  all  property  of  railroads  shall  be  taxed,  and  s 
as  is  in  towns  shall  bear  its  share  of  municipal  taxa.t 
The  legislature  in  Maryland  are  to  provide  for  taxation  ( 
foreign  corporations  doing  business  in  the  state. 

EXEMPnONS. 

Lots  in  towns,  within  one  mile  of  limits  to  the  extent  of  ^ 
one  acre,  and  lots  one  mile  or  more  distant  to  five  z 
extent,  with  buildings  thereon,  used  exclusively  for  religious,  .1 
school,  or  charitable  purposes,  are,  in  Alabama,  and  may  be  J 
in  Missouri,  exempt ;  in  California  all  property  exempt  by, 
or  belonging  to,  the  United  States ;  in  Colorado  the  ii 
in  the  value  of  land  caused  by  the  planting   of  hedges,  J 
orchards,  and  forests  may  for  a  time  be  exempted.     The  | 
personal  property  of  every  individual  is  exempt  in  Minne- 
sota, and  may  be  in  Ohio,  to  the  value  of  iaoo  ;  in  Tennes-  i 
see  to  the  value  of  ^loo  ;  in  Kansas  the  property  of  every  I 
family  to  the  value  of  ^200 ;   and  household  property  i 
Louisiana  to  the  value  of  <S'>o  »  'n  Texas,  ^250.  ' 

Growing  crops  are  exempt  in  California ;  the  direct  prod-  ' 
ucts  of  the  soil  in  the  hands  of  the  producer,  in  Texas  an4'  I 
Tennessee ;  and  in  the  latter  state  such  products  in  the  ij 
possession  of  the  immediate  vendee,  and  also  articles  manu- 
factured of  the  produce  of  the  state,  except  for  expense  ofii 
inspection.     Supplies  for  home  and  farm  use  are  exempt  iv< 


CONSTITUTIONAL  PROVISIONS.  399 

North  Carolina  provides  that  the  followmg  may  be  exempt : 
wearing  apparel,  arms  for  muster,  all  household  furniture, 
mechanical  instniments  of  mechanics,  agricultural  imple- 
tneitts  of  farmers,  libraries,  and  scientific  instruments,  itie 
total  exemptions,  however,  not  to  exceed  in  value  ^300. 


Valuation   / 

It  is  provided  in  the  Louisiana  constitution  that  the  assess- 
ment of  property  shall  never  exceed  its  cash  value  ;  that 
x-payers  may  test  the  correctness  of  assessments  in  court ; 
and  that  valuation  for  purpose  of  state  taxation  shall  be  taken 
s  valuation  for  local  taxation.  Cultivated  and  imculiivated 
land  of  the  same  quality  and  similarly  situated  are  to  be 
assessed  at  the  same  value  in  California. 

PuBPOsrs  OF  Taxation. 

In  Texas,  taxes  can  be  levied  for  costs  of  collecting  the 
evenue,  to  protect  the  frontier,  for  the  erection  and  repair 
of  public  buildings,  and  for  the  enforcement  of  quarantine 
regulations;  in  New  Hampshire  and  Massachusetts,  for  the 
necessary  defence  of  the  government ;  in  I^uisiana,  for  the 

ctioD  of  levees ;  in  Georgia  and  Louisiana,  to  supply 
Confederate  soldiers  with  wooden  arms  and  legs  ;  in  Ne- 
braska, to  provide  such  revenue  as  may  be  needful ;  and  in 
Missouri  and  Texas,  for  public  purposes  only.  In  Florida, 
a  tax  may  not  be  levied  to  pay  interest  on  bonds  of  any 
chartered  company.  In  Arkansas,  taxes  for  other  purposes 
may  be  enacted  by  a  two-thirds  vote  of  both  houses. 

In  Missouri  it  is  provided  that  all  revenue  shall  go  directly 
into  the  treasury,  and  appropriations  shall  be  made  there- 
from in  the  following  order  of  priority  :  first,  to  pay  interest 
on  the  public  debt :  second,  certain  sum  for  sinking  fund ; 
third,  free  public  school  purposes ;  fouitb,  cost  of  assessing 


«0  CONSTITUTIONAL  PROVISIONS. 

and  collecting ;   fifth,  payment  of  the  civil  list ;    sixth,  the  ~ 
support  of  charitable  institutions  of  the  state ;  and  seventh, 
for  the  pay  of  the  General  Assembly  and  such  other  pur- 
poses  not   prohibited   by  the    constitution,   as   may   : 
necessaiy.' 

Amount  of  State  Tax. 
The  limits  of  the  amount  of  state  taxation  for  any  one  1 
year,  placed  by  slate  constitutions,  are  as  follows :  in  Ala- 
bama, 0.75  per  cent. ;  in  Colorado,  0.60  per  cent.,  or  0.40 
per  cent,  when  the  valuation  reaches  5ioo,ooo,ooo ;  in 
Louisiana,  0.60  per  cent. ;  in  Texas,  exclusive  of  tax  to  pay 
state  debt,  0.35  per  cent. ;  in  Arkansas,  1  per  cent. ;  ia 
Missouri,  o.ao  per  cent,  or  a.15  per  cent,  when  the  valua- 
tion exceeds  $900,000,000. 

Poll  Tax. 

By  the  constitutions  of  Ohio  and  Nfaryland  poll  taxes  are 
declared  oppressive,  and  are  prohibited. 

The  following  exemptions  are  made  by  the  constitutions  I 
of  the  following  states :    paupers,   in  North  Carolin 
California ;    idiots  and   insane   persons,  in  California ;    the  j 
aged  or  infirm,  in  West  Virginia,  North  Carolina,  Tennessee  j 
Indians  not  taxed  or  uncivilized,  in  Califoniia  and  Nevada. 

In  South  Carolina  no  additional  poll  lax  can  be  levied 
by  any  municipal  corporation  or  by  the  state. 

Incomk  and  License  Taxes. 
Such  taxes  must  be  uniform  upon  each  class  in  Nebraska,  1 
They  cannot  be  imposed  on  mechanical  or  agricultural  pur- 
suits, in  Texa.s  ;   nor  upon  licenses,  in  Florida  ;   but  may  be'J 
imposed  on  all  persons  in  Louisiana,  exeeft  clerks,  laborer^ 
clergymen,  school  teachers,  those  engaged  in  mechsuiica 
'  Hitchcuck  "  American  Stale  Conililulions,"  pAge  38. 


CONSTITUTIONAL  PROVISIONS.  401 

agricultural,  hordcultural,  and  mining  pursuits,  and  manufac- 
turers of  anything  except  liquor,  tobacco,  etc.,  and  cotton- 
seed oil.  In  North  Carolina  incoioes  from  property  already 
taxed,  cannot  be  taxed. 

PkiVATK  Appropriations,  Claims,  and  Debts. 

No  appropriation  of  money  out  of  the  treasury  shall  be 
made  in  any  private  law,  according  to  the  constitution  of 
Illinois ;  and  in  Texas  no  appropriation  for  private  or  indi- 
vidual purposes.  It  is  also  provided  in  the  Illinois  consti- 
tution thai  the  Illinois  and  Michigan  Canal  can  never  be 
sold  or  leased,  except  by  vote  of  the  people,  and  also  that 
no  lien,  etc.,  in  the  original  charter  of  the  Illinois  Central 
Railroad  shall  be  released  or  impaired.  New  York  may  not 
sell  or  lease  or  otherwise  dispose  of  her  canals,  and  in  Mary- 
land, canals  in  which  the  state  is  interested  cannot  be  sold 
unless  the  sale  is  ratified  by  the  ensuing  legislature. 

The  constitution  of  Louisiana  gives  the  legislature  the 
right  to  grant  to  a  railroad  or  canal  the  right  of  way  through 
public  land.  In  Maryland  the  legislature  can  appropriate 
no  money  in  payment  of  a  private  claim  of  over  t^oo,  unless 
proved  before  the  comptroller  and  reported  on  by  him.  In 
Illinois  and  West  Virginia  the  legislature  may  appropriate 
for  expenses  incurred  by  private  persons  in  suppressing  in- 
surrection or  repelling  invasion.  In  New  York  no  claim 
shall  be  allowed  against  the  stale  which  would  be  barred  by 
lapse  of  time  if  made  against  a  private  person. 

^^  Internal  Im!-rove.vent. 

^1  The  Tennessee  constitution  provides  that  a  well -regulated 

^V  system  of  internal  improvement  shall  be  encouraged  by  ihe 

^1  legislature  ;  and  in  Mississippi  a  l>oard  of  public  works  shall 

^1  be  established  for  that  purpose. 


CONSTITUTIONAL  PROVISIONS, 


MiSCKLLANEOVS    RESTRICTIONS. 

No  appropriation  for  a  bureau  of,  or  to  assist  or  cncour*  J 
age  immigration,  shall,  according  to  the  constitution  i 
Texas,  be  made. 

Loans  of  Ckedft. 

In  Alabama  the  state  may  not  be  interested  in  any  private  ' 
or  corporate  enterprise ;  in  Tennessee  the  state  may  not 
issue  bonds  to  a  railroad  which  is  in  default  of  payment  of 
interest  on  bonds  previously  issued,  or  which  has  sold  them 
below  par.  Upon  vote  of  the  people.  North  Carolina  may 
loan  its  credit. 

Money, 

The  constitution  of  Texas  provides  that  the  state  shall  1 
have  no  power  to  issue  treasury  notes  or  warrants  intended  \ 
to  circulate  as  money. 

PAVMENT   OF  TAXES  A   QUALIFICATION    FOB  VonHQ. 

In  Georgia  all  taxes  except  for  the  year  of  election  must  \ 
be  paid  before  one  can  vote ;  in  Massachusetts,  Pennsj*-  1 
vania,  and  Delaware,  payment  of  a  state,  covmty,  or  city  tax 
within  two  years  preceding  the  election  is  required  of  a    | 
voter;   in  Rhode  Island  he  must  have  paid  all  poll  taxes 
assessed  upon  him  for  a  period  of  two  years  preceding ;  in    ' 
North  Carolina,  all  poll  taxes  for  a  period  prescribed  by  the 
legislature ;  in  New  Hampshire  no  person  can  vote  who  ii   ' 
excused  from  paying  taxes  at  his  own  request ;  in  Mass&-   , 
chusetts,  however,  a  person  exempt  from  taxation  by  law  i 
may  vote  ;  in  Rhode  Island  he  must  have  paid  a  tax  to  the  "j 
amount  of  one  dollar,  unless  possessed  of  real  estate. 

In  municipal  elections  in  Texas,  to  detenrine  the  i 
ditiire  of  money  or  the  assumption  of  debt,  no  person  ( 
vote  who  does  not  pay  a  property  tax  in  such  municipality.  J 


CONSTITUTIONAL  PROVISIONS.  403 

In  the  Virginia  constitution  of  1870  payment  of  taxes  was 
made  a  prerequisite  for  voting ;  but  this  provision  was  abol- 
ished in  iS8z  ;  and  in  South  Carolina  an  amendment  was 
carried  in  the  same  year  which  accomplished  practically  the 
same  purpose. 

In  several  states  the  payment  of  poll  taxes  is  made  a  pre- 
requisite for  voting  by  statutory  provision. 

Municipal  Finance  and  Taxation. 
CBKEitAi.  Principles. 
Municipal  taxes  in  North  Carolina  and  Tennessee  must 
be  levied  according  to  the  value  of  property ;  in  Missouri 
they  may  be  levied  00  all  property  subject  to  stale  taxation, 
and  the  valuation  may  not  be  greater ;  in  Louisiana  the 
valuation  must  be  the  same. 


Amount  of  Municipal  Tax. 

The  rates  of  county  taxation  for  one  year  are 

follows :  — 

Arkanw-s 

\    percent. 

AUbuna, 

i      "      " 

Illmoii, 

i      "      " 

W.  Virginia. 

95    «napet«ioa 

Loui>i>n>, 

1    percent. 

•1  ;;  ;; 

New  York, 

TexM, 

\     "     "     at  one-half  of  rate  of  slate  tax. 

N.  (Jirolin*, 

twice  llBle  lax  (except  for  special  purpose 

and  with  ipecial  approval  uf  the  legisla- 

lure). 

Miwouri, 

i    per  cent,  in  aggregate  where  valuation  ij 

not  over 

- 

^  per  cent,  in  aggregnle  where  valuniion  is 

between 

CONSTITUTIONAL  PROVISIONS. 


\    per  cent,  in  aggregate  where  valua 


t.  in  aggregate  where  valuation  is 


i 


The  following  taxes,  however,  are  not  included  in  amouDts 
limited  above :  in  Alabama,  "  special  taxes  authorized  by 
law  "  ;  in  West  Virginia  and  Arkansas,  taxes  for  free  schools  ; 
in  Illinois,  Nebraska,  West  Virginia,  Arkansas,  and  Texas, 
taxes  for  debts  already  incurred ;  and  in  Texas,  taxes  for 
the  erection  of  public  buildings,  and  taxes  for  roads  and  [ 
bridges,  — the  former  being  limited  to  one-half  per  cent.  1 
in  one  year,  the  latter  to  -^  per  cent. 

Municipal  corporations  may  levy  a  greater  rate  than  the  '■ 
above  in  a  few  stales.  The  rate  may  be  raised  in  Loui- 
siana by  a  vote  of  the  property  tax-payers  —  the  tax  in 
this  state  to  be  for  public  works  ;  in  Illinois  and  Nebraska, 
by  a  vote  of  the  electors  of  the  county  ;  and  in  West  Virginia, 
by  a  three-fifths  vote  of  such  electors. 

In  the  following  states  the  rate  of  taxation  in  towns  and   ] 
cities  is  limited  for  any  one  year  as  follows :  — 
Arkanu^  )  per  cent. 
Alabama,   \       " 

Texas,         (for  lown  not  liaving  special  charter)  \  per  cent. 
Texas,        in  cities  of  over  10,000,  ij  p«  tent. 
Missouri,   in  cities  of  over  30.000,  1      "      " 

"  in  cities  of  between  10,000  and  30,000,  ^^  per  cent 

"  "       "  less  than  1,000,  j     1.      « 

"  in  school  districts,  for  school  purposes,  ^   "      " 

These  rates,  however,  in  Missouri,  for  school  purposes,  may  1 
be  increased  by  a  vote  of  the  lax-paying  voters,  and  for  the  j 
purpose  of  erecting  public  buildings  by  a  two-thirds  vole  of 
all  voters. 


I 


CONSTITUTIONAL  PROVISIONS.  405 

Taxes  for  paying  existing  or  hereafter  renewed  indebtedness 
are  not  included  in  the  above  limited  amounts  in  Missouri, 
Arkansas,  and  Alabama. 

PuKPOSES  Prescribed. 
Every  town  and  city  in  Wisconsin,  according  to  its  con- 
stitution, shall  by  tax  annually  raise  a  sum  for  the  support 
of  common  schools  not  less  than  half  the  sum  received  from 
the  state  school  fund ;  in  North  Carolina  no  tax  shall  be 
kvied  by  counties,  towns,  etc.,  except  for  necessary  ex- 
penses, without  a  special  vote  of  the  electors  ;  in  Arkansas 
the  legislature  may  authorize  school  districts  to  levy  a  tax 
for  school  purposes  not  exceeding  one-fifth  per  cent. ;  in 
Georgia,  counties  may  levy  taxes  for  schools  under  special 
authority  of  legislature  and  a  two-thirds  vote  of  the  county ; 
in  Texas  counties  may  raise  a  special  tax  for  common  schools 
not  exceeding  one-fifth  per  cent.  Counties,  towns,  etc., 
may  levy  taxes  in  Texas  for  current  annual  expenses,  and 
for  interest  and  sinking  fund  of  debts  ;  in  Georgia,  for  edu- 
cational purposes ;  and  in  Georgia  and  Mississippi,  for  the 
building  and  repair  of  court-houses,  jaib,  bridges,  and  neces- 
sary conveniences  for  the  people. 

Special  Taxes. 
Betterment  taxes  must,  in  Arkansas,  be  consented  to  by  a 
majority  of  the  property -holders  in  the  locality  affected,  and 
must  be  ad  valorem  aud  uniform ;  and  In  California,  must 
be  collected  before  the  work  is  commenced.  A  specified 
tax  may,  in  Louisiana,  be  levied  for  public  improvements  or 
railroads  by  vote  of  the  tax-payers. 

Loans  of  CEEDrr. 
In  Maryland  no  county  can  loan  its  credit  to  any  associa- 
tion or  corporation   except   by  act  of  the   legislature,  ap- 


406  CONSTITUTIONAL  PROVISIONS. 

proved  by  the  next  legtslaiure  aRer  publicatioD  in  the  local- 
ity interested.  I'he  Maryland  constitution  contains  this 
special  provision  regarding  the  city  of  Baltimore,  viz, :  that 
it  may  not  incur  debt  or  loan  its  credit  in  aid  of  any  individ- 
ual, corporation,  etc.,  or  iu  the  construction  of  works  of 
internal  improvement,  unless  such  debt  or  credit  be  author- 
ized by  an  act  of  the  General  Assembly  and  by  an  ordinance 
of  the  city,  submitted  to  the  legal  voters  of  the  city  of  Balti- 
more and  approved  by  a  majority  of  the  votes  cast.  In 
Iowa  no  municipality  can  become  stockholder  in  a  bank  ; 
nor  in  Minnesota  and  Nebraska,  issue  bonds  or  become  in- 
debted in  aid  of  railroads  for  more  than  ten  per  cent,  of  its 
valuation  ;  in  the  latter  state  five  per  cent,  extra,  on  a  two- 
thirds  vote  of  the  people. 

The  following  limitations  are,  however,  noted  :  in  Nebraska 
counties,  towns,  etc.,  may,  by  vote  of  the  electors,  under  the 
authority  of  law,  loan  credit,  etc. ;  in  MississipfH,  on  vote 
of  two-thirds  of  electors  and  with  authority  of  legislature  \ 
in  Tennessee,  on  three-fourths  vote  of  electors. 

Statutory  provisions,  regarding  the  above  ptnnts,  are  mticb 
more  numeious,  but  are  not  giveiL 


IN  a  comparalive  study  of  the  tax  systems  of  the  various 
states,  it  is  necessary  to  examine  not  only  the  provisions 
regarding  taxation  as  found  in  the  state  constitutions  or 
statutes,  but  also  the  resuhs  of  those  laws  in  operation,  to  be 
found  in  the  reports  of  the  financial  officers  of  the  states. 
An  examination  of  the  laws  will  make  plain  who  should  pay 
the  taxes  and,  perhaps,  what  each  should  pay,  but  an  exami- 
nation of  the  budgets  of  the  states  will  show  who  really  pay 
the  taxes,  and  how  much  they  pay.  In  this  present  work, 
however,  it  will  not  be  possible  to  make  an  analysis  suffi- 
ciently detailed  or  extended  to  show,  save  in  a  general  way, 
how  great  the  burden  of  taxation  is,  upon  whom  it  rests,  and 
for  what  the  revenues  derived  from  taxes  are  expended.  It 
is  undertaken  to  give  in  brief  the  essential  points  to  be 
gathered  from  the  yearly  financial  reports. 

This  task  of  analysis  —  or  synthesis,  as  it  has  been  in  some 
cases  —  has  not  been  an  easy  one.  In  the  first  place,  there 
is  no  approach  to  uniformity  in  the  methods  of  keeping  or 
publishing  the  accounts  in  the  various  states,  nor  in  the 
classification  of  receipts  and  expenditures.  In  one  stale, 
for  example,  all  receipts  are  grouped  according  lo  their 
source  in  one  grand  list,  and  so  of  the  expenditures;  in 
another,  the  receipts  and  disbursements  are  grouped  accord- 
ing to  the  funds  into  or  from  which  they  are  paid,  each  tiind 


1 
I 


408 


STATISTICAL   INFORMATION. 


having  a  separate  account ;  and  in  a  third,  the  general  plan 
being  as  id  the  last,  a  portion  of  the  receipts  pass  through 
one  fiLnil  into  another,  and  are  thus  mentioned  twice  in  the 
column  of  receipts,  and  twice  in  the  column  of  disburse- 
ments. These  differences  arise  from  the  different  methods 
of  financial  legislation,  and  are  mentioned  to  show  the  difii' 
culty  of  analysis  and  classification.  There  is,  it  may  be 
incidentally  remarked,  abundant  room  for  reform  in  the 
methods  of  keeping  state  and  municipal  accounts  of  reve- 
nues and  expenditures.  There  have  been  many  other  things 
to  render  the  work  a  perplexing  one,  but  the  greatest  care 
has  been  taken  to  avoid  errors,  and  it  is  believed  that  the 
facts  set  forth  are  trustworthy. 

Because  of  the  difficulty  of  classification,  just  mentioned, 
a  brief  summary  of  the  finances  of  each  state  is  first  given, 
and  afterward,  such  matter  as  could  be  conveniently  grouped, 
is  given  in  tabular  form. 

In  collection  of  these  statistics  not  only  have  the  auditors', 
comptrollers',  and  treasurers'  reports  been  of  assistance,  but 
also  the  "  American  Almanac,"  edited  by  Mr.  A.  R.  SpoRbrd, 
the  librarian  of  Congress. 


I 


3.    REVENUES  AND  EXPENDITURES   OF   EACH  ^ATB. 

For  the  fiscal  year  ending  September  30,  1S86,  the  total 
receipts,  exclusive  of  the  amount  collected  and  paid  out 
for  the  public  schools  in  the  counties,  were  S888,724 ;  t 
disbursements,  ^818,366.    Of  the  total  sum  received,  the   ' 
;  accruing  fi-om  a  general  tax  on  property  formed 

U 


>Th[ 

Qughoul  these  ilalemenls  the  cents  have 

not  been  given.     II 

bowevei 

',  they  were  in  the  reporu,  etc.,  fifty  ui  mi 

)re,  Jl«.  w»  «Jdcdi 

ifl<«,i 

lo  account  wu  taken  of  them. 

REVENUES  AND  EXPENDITURES. 


L 


the  greater  part ;  thai  from  licenses  being  next  in  amount. 

The  following  were  the  principal  receipts  :  — 

General  Iiues ^55,101 

Miscellaneous  lice ntei 99.471 

Railroad  licenses l^.S^o 

Insuiance  canipany  liccDBCB 4>377 

Fees 568 

Purcbuc  and  redemplioD  of  lands 9>777 

There  was  also  received  £11,099  fro™  ''^^  Department  of 
Agriculture,  being  a  part  of  the  fertilizer  tax,  and  f 3 1,939 
from  the  university  land  fund,  derived  probably  from  the 
sale  of  university  lands.  The  hire  of  convicts  was  the  only 
other  considerable  item,  and  was  more  than  balanced  by  the 
expenditure  for  the  same. 

There  was  a  school  fund  tax,  amounting  to  £335,000,  and 
a  poll  tax  of  £1.50  per  poll,  amounting  to  £150,000,  collected 
and  paid  out  in  the  counties. 

The  total  assessed  valuation  in  18S5  was  £172,538,933: 
that  of  real  estate,  £102,037,631  ;  of  railroad  property, 
£22,296,870;  the  ratewas6ocenlsper£ioo,  but  was  reduced 
in  1887  to  55  cents.' 

>  It  is  intCTCsting  to  notice  that  the  assessed  value  of  dirlu,  gani, 
pistols,  canes,  etc,  in  Alabama  greatly  exceeds  that  of  (arming  imple- 
menU,  the  value  ol  the  furmer  being  returned  as  t429p49J,  while  that  of 
the  lauer  is  returned  as  only  (87,567,     A  paper  on  "Taxation  in  Ala-       ^^h 
bama,"  by  Mr.  W.  T.  Sinders,  of  that  stale,  read  before  the  class  in      ^^H 
political  economy  in  VandeibiU  University,  lies  herore  me.      In  tills      ^^H 
essay  it  is  claimed  tbat  the  reason  fur  this  large  apparent  excess  of  value     ^^| 
of  warlike  implements  is  the  fact  that  farming  implements  to  the  value 
of  (25  are  exempt  from  taxation,  and  the  home-made  tools,  generally 
used,  are  not  regarded  as  of  much  value,  while  every  one  knows  Moctly 
what  he  paid  for  his  dirk  or  gun,  and  this  can  also  be  ascerlained  from      ^^^ 
merchants.     All  firearms  are  taxable,  and  in  the  "black  bell,"  where      ^^^| 
there  are  six  or  seven  blacks  lo  One  white,  il  often  happens  that  (veanni      ^^H 
mte  the  only  property  owned  by  a  negro  which  the  state  can  teach,  ^^^| 


STATISTICAL   INFORMATION. 


The  cost  of  assessment  and  collection  of  taxes  was  about 
5  per  cent,  of  sums  collected. 

The  principal  eitpenclilures  were  ;  for  civil  list,  198,837  ; 
for  payment  of  interest  on  bonded  debt,  8323,097 ;  for 
charitable  and  educational  purposes,  5230,780. 

The  sixteenth  section  fund,  belonging  to  the  several 
counties  of  the  state,  amounted  in  September,  1886,  to 
2i,8zo,686.  The  interest  on  this  amount  accrues  to  the 
benefit  of  the  educational  fund. 

The  state,  besides  the  interest  on  this  fiind,  had  at  this 
dale  a  bonded  debt  to  the  amount  of  ^9,193, 900,  bearing 
interest  at  4,  5,  and  6  per  cent. 

Arkansas. 

In  the  latest  financial  report  of  Arkansas  to  be  had,  1878, 
the  total  receipts  into  the  general  revenue  were  given  as 
about  ^750,000,  more  than  half  of  which  consisted  of  loans, 
f  118, 050  was  collected  by  a  property  tax;  Si6aa  from 
insurance  companies;  Jii,z28  from  fees;  £12,064  from 
commission  sales.  The  revenues  of  the  schoo!  fiind  were 
chiefly  from  taxes ;  of  the  permanent  school  fund,  from 
sale  of  lands,  fines,  and  estrays ;  and  of  the  sinking  fund, 
from  liquor  licenses  and  interest. 

The  following  statistics  are  taken  from  the  "American 
Almanac"  for  1888  :  — 

'For  the  year  ending  October,  1884,  the  receipts  were 
|i,44S,iao,  and  the  expenditure,  #515,605.  In  1883  the 
receipts  were  ^830,000  ;  the  expenditures  5590,000, 

The  amount  of  taxable  property  in  1886  was  as  assessed : 
real,  578,444,227;  personal,  548,382,167;  railroad,  513,- 
704,639;  total,  5140,531,033. 

The  rate  of  state  tax  was  40  cents  on  the  5too.  A  poll 
tax  of  5 1  was  levied  for  school  purposes. 


REVENUES  AND  EXPENDITURES. 


411 


I 


The   amount   of  the   state   debt,    October,    1885,   was 
£2, 32 1,100  principal;  pasl-duc  interest,  f  1,786.943  ;  total,  ' 
S5, 108,043  ;  mostly  bearing  interest  at  6  per  cent. 

There  is  an  additional  debt  to  the  amount  of  %\  1,000,000, 
consisting  of  Levee  and  Railroad  Aid  bonds  and  others,  the 
former  of  which  have  been  declared  by  the  Supreme  Court 
of  the  state  as  unconstitutional  and  invalid ;  the  latter  have 
been  declared  illegally  issued. 

California. 

There  was  received  into  the  state  treasury  for  the  fiscal 

year  ending  June  30,  1886,  the  sum  of  $6,476,230.    The 

principal  items  were  as  follows :  — 

Prnpcrty  tax ^,332,198 

Poll  IBU  (>2  per  poll) 29&.9I9 

Sutc  Khoul  land* 1O9.586 

Fees 54.3^7 

Rent  of  H-harvet  and  collection  of  lolls.     .    .    .  347,256 

Rents  and  privileges  (Vosemite  VaHejr)      ,    .    .  10.S90 

Railwaj' Uxei 851413 

XJccnle«  incorporaled  banks 11,70a 

Sutei  of  jute  products 51.6S0 

Estates  of  deceased  persoai 13.210 

Redemplion  of  bonds 288,500 

Interest 228,277 

The  disbursements  for  the  same  year  amounted  to  %%,^l^^,^ 
6i3.  Of  this  (1,894,487  was  for  the  support  of  schools; 
fii8,8t2  for  educational  institutions ;  ^1,162,045  for  chari- 
table and  penal  institutions;  8194,578  for  harbor  improve- 
ments; J634.615  in  purchase  of  bonds;  <j79.38o  for 
payment  of  interest  on  bonds;  and  8411,654  as  payment 
of  county  portion  of  railrciad  taxes  ;  and  over  ?8oo,ooo  for 
payment  of  salaries  of  public  officers,  etc. 

The  total  valuation  of  propeny  fur  1886  was  $816,446,700, 


412  STATISTICAL  INFORMATION. 

of  which  the  personal  was  £151,937,133,  being  24.64  pet 
cent  of  the  real.  The  state  rate  of  taxatioQ  was  56  cents  on 
the  {100. 

Among  the  principal  items  in  the  list  of  assessed  valua- 
tions were:  merchandise,  £31, 449, 166;  moneys,  510,874,- 
971;  solvent  credit,  £15,428,987  ;  mortgages,  ^98,833, 6 14; 
fiimiture,  £12,426,012;  horses,  £11,883,980;  cattle,  £13,- 
541.661;    sheep.  £5,683,083. 

The  cost  of  assessing,  auditing,  collecting,  and  paying  in 
the  taxes  was  £259,563.  or  about  5  per  cent,  of  taxes  col- 
lected. 

The  state  school  fund  had  in  its  possession  stale  and 
county  bonds  to  the  amount  of  £3,549,500.  This  (imd  is 
maintained  by  interest  on  these  bonds ;  by  poll  taxes ;  by 
interest  on  sales  of  certain  lands,  the  500,000-acre  land 
grant,  and  sixteenth  and  thirty-sixth  sections  land  grant ;  by 
sale  of  geological  survey  reports,  and  by  a  percentage  of 
the  state  and  railway  taxes  —  chiefly  the  former.  The  state 
rale  in  1885  was  54^5  cents  on  the  Jioo,  of  which  ii-^ 
cents  was  for  school  purposes.  The  university  fund  held 
bonds,  bearing  6  and  7  per  cent,  interest  to  the  amount  of 
£i,363,500- 

ITie  funded  debt  of  the  state  was  in  1886,  £2,953,500, 
£3,614,000  of  which  was  held  by  the  slate  school  and  uni- 
vcraity  funds,  leaving  bonds  to  the  amount  of  £339,500 
only,  in  private  hands.  The  state  funded  debt  bonds, 
which  constitute  the  greater  part  of  the  debt,  fall  due  in 
1893.  Thus  it  will  be  seen  the  state  is  practically  out  of 
debt. 

The  fimdcd  debt  of  the  counties  amounted  in  1885  to 
£7,717,741,'  the  floating  debt  to  £667,445. 

'  No  account  wu  Toand  of  sinking  fuDds,  but  il  it  probable  Ihnt  indl 
odit.     Il  il  vec]'  generally  true  of  minor  civil  divisions  as  well  as  of 


REVENUES  AND   EXPENDITURES. 


This  state  has  over  thirty  funds  among  which  are  distrib- 
uted the  receipts  according  to  some  prescribed  rule.  The 
total  receipts  for  the  two  years  ending  November  30, 
were  ^1,837, 395  ;  the  disbursements,  51,515,951,  For  the 
general  revenue  a  tax  of  four  mills  on  the  dollar  was  laid,  and 
for  other  specified  funds,  of  iJ-J  mills,  and  in  addition  to 
these,  a  military  poll  tax  of  Ji  per  capita.  The  amount 
charged  the  counties  on  account  of  these  taxes  was,  for  the 
two  years,  Ji, 403, J 14,  but  the  amount  collected  for  1S85  was 
but  93.30  per  cent,  of  the  amount  assessed,  and  for  1886  but 
92,81  per  cent.  There  was  received  from  fees  S43.440,  and 
from  insurance  taxes  and  fees,  ?37,746.  A  considerable 
amount  is  received  from  sale  of  land  and  interest. 

The  assessed  valuation  of  all  property  for  t886  was 
{134,369, 710.  The  expenditures  were  chiefly  in  payment 
of  salaries,  for  the  building  of  the  capitol,  for  the  state  peni- 
tentiary, and  for  charitable  and  school  purposes. 

The  amounts  invested  for  the  various  funds  were  as 
follows :  — 

Public  school  fund f>7<>567 

Fublic  schoul  land  lease 89,754 

Slate  universily  fund 40,660 

Inlcrnnl  impruvemenl  fund      ........         »9,894 

Penilentlary  land  fund 4i'^5 

Public  Iniildiiig  land  fund 16,626 

The  stale  debt  consisted  of  outstanding  warrants  bearing 
6  per  cent,  interest ;  certificates  of  indebtedness,  bearing  6 

stales  that  the  real  debt  is  les;  than  the  nominal.  The  net  ot  rexi  debt 
is  found  by  subtracting  the  amount  in  the  sinking  fund  from  tlie  nomi- 
nal debt.  The  bonds  of  a  Maryland  dcbl  were  recently  wholly  in  the 
sinlcing  fund. 


I 
I 


414  STATISTICAL   INFORMATIOff. 

per  cent,  interest ;  and  loco  weed  certificates  unredeemed  j  1 
in  all  ^66,874.     But  there  was  sufficient  revenue  in  the  I 
treasury  to  meet  all  the  debt  save  fi  10,379.    1"hc  state   . 
constitution  prohibits  the  legislature  from  creating  a  debt 
in  advance  of  appropriations,  beyond  the  amount  provided 
for  by  taxation,  and  consequently  the  slate  has  no  bonded 
debt. 

Connecticut, 
The  receipts  from  revenue  for  the  fiscal  year  ending  June 
30,   1886,  were  $1,813,702,  the  principal  items  being  the   | 
following :  — 

Slilc  lax  fcomlowns UVIAT 

Military  commutalion  Ibx 102,472 

Tax  on  lailioaih 626,199 

"     "   insurance  companies 225,484 

"     "   saringi  banks x/a.^c/a 

"     "   express  companies 8,675 

"      "  lelegraph  and  (elepbone  companies  .     .     ,  6,926 

"     "   non-resident  Etoclt 7l>549 

"      "    insurance  agenls  of  other  states     ....  22,585 

The  expenditures  for  the  same  period  amounted  to 
^3, 249, 597,  over  one-half  being  in  payment  of  interest  and 
in  purchase  of  bonds. 

The  amount  of  property,  personal  and  real,  as  s 
for  1886,  was  5349,977,339.     The  rate  was  \i\  cents  0 
f  100.      A  tax  of  one  per  cenL  is  levied  on  railroad  com-    . 
panies  on  the  market  value  of  all  stock,  plus  the  market 
value  of  funded  and  floating  debt,  less  amount  of  cash  on   1 
hand.! 

1  Hiii  percentage  was  derived  by  a  calculalion  based  on  pablbhal  1 
returns.    The  Canoecticat  lysteni  is  thus  described  in  the  "Report  ol,l 

the  Special  Tax  Commission,"  made  Jatiiiiry,  1S57:  — 

"  The  present  system  assumes,  with  certain  minur  modiiicatiolu,  tl 


REVENUES  AND  EXPENDITURES. 


415 


I 


The  treasurer  holds  in  custody  for  the  Town  Deposit 
fund,  Si8,874.  on  which  the  interest  received  is  paid  to 
the  several  towns.  There  is  an  Agricultural  College  fund 
invested  in  bonds  and  mortgages,  amounting,  in  1886,  to 
?i35,ooo.  There  is  also  a  large  school  fund,  Ihc  interest 
thereon  for  the  same  year  amounting  to  Ji  71,100. 

The  amount  of  the  funded  state  debt,  July  i,  1886,  was 
?4. 271, zoo;  ^1,030,000  five  per  cent,  bonds,  $1,500,000 
of  three  and  one-half  per  cents.,  and  fi, 740,000  three 
per  cents. 

Delaivare. 

There  is  no  state  valuation   of  property,  and  all   state 

revenues  are  derived   from  other  sources.     The  following 

were  the  principal  receipts  of  the  general  revenue  for  j  886  :  — 

Railcosda $41,528 

License*  (1«»  amount  to  school  fund) AlA^i 

lolcretl I4,OCJO 

Diviilendi  Trom  banki 4^545 

Fee> i,l20 

InberiUnce  tKi 913 


The  total  receipts  into  this  fund  were  f  131,190;  the  dis- 
bursements, Si?o,028.  Thechief  items  of  expenditure  were, 
interest  on  bonds,  837,000;  salary  of  officers,  $33,000;  and 
for  free  schools,  ?3o,ooo. 

The  school  fund  investments  in  bonk  stocks,  bonds,  etc., 
amounted  to  <495,749.  This  fund  receives  also  a  part  of 
the  license  fees;  its  share  in  1886  was  $13,500.     The  state 

the  maiket  viUue  of  the  stock  and  bonds  and  flouting  debt  of  a  railroad 
company  represents  the  taxable  value  of  the  property  itself,  and  that 
a  tax  of  one  pel  cent,  upon  that  piopeily  is  ptsctically  Ihe  average 
rale  thai  it  would  pay,  if  assessed,  bit  by  bit,  in  each  town  that  the  ting 
pasKi  through." 


4!6  STATISTICAL   INFORMATION. 

had  173,050  invested  in  bank  stock,  and  had  £600,000  on 
loan. 

The  state  indebtedness  January  i,  1887,  was  5824,750,  as   , 
foUows  :  outstanding  bonds  bearing  interest  at  4  per  cent,, 
2585,000;  school  bonds  at  6  per  cent.,  £156,750;  amount 
on  which  interest  at  5  per  cent,  is  paid  Delaware  College, 
f  83,000.     But  the  state  is  practically  out  of  debt,  as  it  holds  I 
interest-bearing  securities  to  the  amount  of  21.168,799. 

Florida. 

The  state  treasurer's  report  for  the  year  ending  December 
31,  1886,  shows  the  total  receipts  on  account  of  general 
revenue  to  be  $383,843,  and  chiefly  from  the  following 
sources ; — 

IJcmse  toi .  $130,420 

Genersl  tax 246,890 

Aaclion  tax 538 

Commisuon  taxes 4>I75 

The    expenditures    on     the     general    revenue    account 
amounted    to    £534,466.      Of    this   amount   £27,734   was 
paid  for  the  collection  of  revenue ;    for  salaries  of  execu-    ' 
tive,  judicial,  and  legislative  departments,  £130,000;    for 
jurors  and  witnesses,  £149,470  ;  for  educational  institutions,    , 
£18,000 ;  and  for  interest  on  the  bonded  debt,  £79,954- 

For  the  support  of  public  schools  a  tax  of  one  mill  is 
levied  and  paid  out  to  the  treasurers  of  the  different  coun- 
ties, amounting,  in  1S87,  to  £72,361. 

There  are  several  educational  funds,  fed  chiefly  by  sale  of  \ 
lands  and  interest  on  bonds.  The  amount  of  bonds  in  the  | 
raiious  funds  December  31,  1887,  was  as  follows ;  — 

In  the  Agricnllura)  College  fund ;t55,&>o 

ConuDOD  icIiiHil  fund 532,284 


REVENUES  AND   EXPENDITURES.  4 

In  the  Seminary  fund (92,300 

"      Sinking  fund  (Bonds  of  1S71) 77-900 

1873    ....     .      150.300 
ToUiI #1,008,584 

The  bonded  indebtedness  of  the  stale  is  represented  by  j 
^350,000  bonds  of  1871,  bearing  7  per  cent,  interest,  and   I 
1925,000  bonds  of  1873,  bearing  b  per  cent,  interest ;  in  all, 
$1,175,000.     But  all  save  ;$4ii,3oo  is  held  by  the  funds 
named  above,  so  that  the  outstanding  indebtedness  is  not 
large. 

The  "Anierican  Almanac"  gives  the  amount  of  taxable 
property  assessed  for  the  year  1887,  ^76,611,409,  and  the   ' 
rate  for  the  year  ending  December  31,   1884,  40  cents  oq 
every  %\oa.     As  above  stated,  one  mill  on  the  dollar  or  10 
cents  on  every  Sioo  goes  to  the  benefit  of  public  schools. 

For  the  fiscal  year  ending  September  30,  1886,  this  state 
has  an  unusually  large  budget.     The  receipts  for  1885  were 
{1,533,320,  and  for  i3S6,  $4,220,130;  the  expenditure  for   I 
1885.   51,441,338,    and    for    1S86,    <4.453.393-      This    ; 
crease  is  due  to  a  refunding  process,  the  state  selling  bonda  j 
to  the  amount  of  Ji, 508, 850,  and  paying  upon  the  public  I 
debt  S3, 103,392.     The  chief  items  of  revenue  are  :  — 

General  lax (871,130 

Riilfoad  tvc      ......,.,...,  95.52' 

Capital  Ux 150,233 

Iniuiance  tax 31,36a 

Privilege  Uua 176,417 

Tel^rapb,  telephone,  and  expreu  conipanies     .     .  5,mS 

liquor  license* 67,881 

Fee* 78.405 

Rem  of  Weil  Point  and  Alknta  R.R. 300,000 

Bank  of  Rome 18,749 


418 


STATISTICAL   INFORMATION. 


niihtif    fl^>if^' 


jxpenditures  are  on  account  of  public  del)^ 
I-  capitol  building,  schools,  and  asy- 


The  chief  e 
civnl  establish  ra 

The  assessed  value  of  all  property  was  8329,489,505  ; 
lands,  and  city  and  town  property,  S182, 366, 39*  ;  railroad 
property,  ?22, 981,927;  personal  propert>-,  $124,141,286. 

The  rate  of  the  state  tax  for  1886  was  35  cents  on  the 
#100. 

The  bonded  debt  of  the  state  outstanding  October  i, 
1886,  was  89,052,620,  the  larger  issues  bearing  interest  at4j-, 
6,  and  7  per  cent. 

Illinois. 

The  revenues  of  this  state  are  derived  chiefly  from  taxes  and 
a  percentage  (7  per  cent.)  of  the  gross  earnings  of  the  Illi- 
nois Central  Railroad.  Of  the  total  amount — $4,666,444 
—  received  into  the  general  revenue  fund,  for  the  two  years 
ending  September  30,  1886,  83,774,363  was  derived  from 
taxes,  8725,208  from  the  gross  earnings  of  the  Illinois  Cen- 
tral Railroad,  and  8150,887  from  fees.  There  was  also 
received  from  the  tajc  on  property,  for  the  use  of  the  school 
fund,  8^,164,739,  of  which  amount  there  was  disbursed 
82,132,084. 

The  total  expenditure  for  the  same  period  from  the  gen- 
eral revenue  fund  was  85,122,800,  Of  this  amount  S6i8,86i 
was  paid  as  salaries  of  officials;  8309,242  to  the  members 
of  the  general  assembly;  8353,652  for  the  completion  of  the 
state  house;  82,353,106  for  charitable  institutions;  and 
8244,120  for  educational  institutions. 

The  total  equalized  value  of  all  property,  personal  and 
real,  for  1886  was  8726,178,132  ;  of  railroad  property  and 
capital  stock  of  other  corporations,  866,728,678.  The  ag- 
gregate equalized  value  was  8793,563,498,  79.77  per  cent 
of  this  being  real,  and  20.23  P^r  cent  personal. 


REVENUES  AND   EXPENDITURES.  419 

The  rale  of  taxation  for  the  same  year  was,  for  state  pur- 
poses, 21  cents  on  every  Sioo,  and  for  slate  school  pur- 
poses, 14  cents,  making  a  total  rate  of  35  cents  on  every 
Si  00. 

The  state  pays  an  annual  interest  to  the  school  fund, 
amounting  to  $139,848  in  the  two  years  named,  and  to  the 
local  bond  interest  fund,  52,779,038,  in  the  same  years. 

The  state  tax  is  small  compared  with  the  total  taxes  col- 
lected for  all  purposes.  In  1885  the  state  tax  was  J3,4Ss,- 
083,  the  county  tax  25,024,407,  the  city  tax  57,383,463,  the 
town  and  district  and  local  taxes  were  ^12,017, 757,  the 
registered  bond  lax  f  1,535,220,  a  total  of  529,445,931. 

The  slate  has  really  00  bonded  debt.  All  bonds  have 
been  called  in  and  cease  to  draw  interest,  but  the  principal  out- 
sUnding  amounted,  October  i,  1886,  to  ^23,600.  The  state, 
however,  as  has  been  noted,  pays  a  large  sum  annually  to 
the  counties,  etc.,  as  interest. 
The  local  indebtedness  is  given  as  follows :  — 

Countiel {12,579,985 

Towoshipt 7,152,048 

Qtfei,  vilUgci,  and  JDCutporated  towns    .    .    .      19,621,675 

School  dbtricti 1,047,137 

Total t4i,5oo,S43 

Indiana. 
In  this  state  there  are  numerous  funds,  chiefly  unproduc- 
tive, among  which  the  receipts  are  distributed.  For  the 
fiscal  year,  ending  October  31,  1887,  the  receipts  into  the 
general  fund  were  52,373,043  ;  into  the  school  fund  52,127,- 
946;  into  the  new  slate  house  fund  5168,159;  into  other 
funds  569,047;  a  total  of  54,738,198.  Of  this  amount 
there  was  received  from  the  state  tax  52,709,635,  or  more 
than  one-half.  There  was  also  an  additional  sum  of  533,- 
566  for  ihi;  support  of  inmates  of  asylums,  etc 


I 


420  STATISTICAL  INFORMATION. 

Among  other  sources  of  revenue  were  the  following :  — 

Feci  (iiMurance) «a3.S47 

Fees  (court  and  olher  sources) 15,386 

Insurance  tax 61,985 

Express  company  tax 366 

The  total  may  be  somewhat  misleading,  as  in  it  are  in- 
cluded some  transfers  from  one  fund  to  another.  Thus  the 
sum  J35 1,430,  a  payment  of  interest  on  bonds,  Agures  in 
the  expenditure  column  of  the  general  fund,  and  in  the 
receipt  column  of  the  school  fund.  It  has  not  been  found. 
convenient  to  re-group  the  receipts  and  expenditures,  and 
they  are  therefore  given  as  found. 

The  expenditures  for  all  purposes  were  {4,7 74,236. 
From  the  general  revenue  fund  the  chief  disbursements 
were;  for  pay  of  public  officers,  clerks,  etc.,  #361,802; 
for  benevolent  and  penal  institutions,  8965,155;  and  for 
educational  institutions,  858,360. 

The  amount  of  taxable  property  as  assessed  for  1885  — 
asgiven  by  the  "American  Almanac" — was:  real,  8566,5  21,- 
981 ;  personal,  8227,004,098 ;  total,  8793,526,079.  Tlie 
rate  of  state  tax,  12  cents  on  each  8100.  There  is  a  capi- 
tation tax  of  50  cents  per  poll  for  state  purposes. 

The  domestic  bonded  debt  of  the  state  was,  October  31, 
1887,  84,388.783;  the  foreign  debt,  82,041.826;  total, 
86,430,608.  The  domestic  debt  consists  of  non- negotiable 
bonds  held  by  the  school  fund,  Furdue  University,  and 
Indiana  University. 

Iowa. 

The  total  receipts  for  the  two  years  ending  July  i,  1887, 
were  83.327,981;  the  expenditures  for  the  same  period, 
$3,511,500.  The  state  tax  of  two  and  one-half  mills  on  the 
dollar  was  the  chief  source  ;    the  amount  received  for  the 


REVENUES  AND   EXPENDITURES. 


VKQ  years  na.med  being  $1,359,883.     Among  othe: 

the  following  are  the  more  important :  — 

In&ane  i!u«  fromcounlics ^11,840 

Olbec  dues  for  chirilable  instilulions 80,461 

Pedlen'  licenses I1I95 

Insurance  laxet '40,J55 

Fees  (msHrince) 51,248 

Other  Fees 16,154 

Tclegrnpli  and  telephone  taxes 12,552 

Railtomi  eommiiiion  Itti 40,302 

The  chief  items  of  expenditure  are,  beside  the  civil  list, 
schools,  penitentiaries,  charitable  institutions,  the  militia, 
nnd  llie  capitol  building,  that  for  charitable  institutions  be- 
ing nearly  one- third  of  the  total  expenditure. 

The  total  equalized  value  of  all  property  for  1887  is  given 
as  $501,369,744 ;  of  real,  $349,213,676 ;  of  personalty, 
$101,665,098;  of  railroad  property,  $38,722,761.  The  rate 
as  already  stated  was  two  and  one-half  mills  on  the  dollar. 

The  taxes  ajsessed  for  all  purposes  in  the  state,  for  1S85, 
were  814,430,547,  the  state  lax  being  but  $1,201,791. 

The  stale  has  a  permanent  school  fund  amounting,  June 
30.  1S87,  to  $4,187,893.  Of  this,  the  several  counties  held 
$3,940,487  ;  the  amount  in  8  per  cenl.  state  bonds  was 
$245,435  ;  the  remainder  consisted  of  contracts  for  real 
estate  sold,  and  cash.  There  are  two  or  three  other  funds 
to  which  the  proceeds  of  the  sale  of  certain  lands  accrue. 

The  state  has  no  debt  except  the  one  of  $245,435  to  the 
school  fund.  This  is  a  permanent  debt,  and  the  state  is 
responsible  only  for  ihe  annual  interest  of  8  per  cent. 


Kamas. 
For  the  fiscal  year  ending  June  31 
ceived  into  the  state  treasury  on  all 


the  amount  re- 
was  ij,566,6a4. 


422  STATISTICAL  INFORMATTON. 

Of  this  amount,  ^1,082,476  was  derived  from  taxei 
from  the  penitentiary ;  and  J5o,S63  from  the  i 
partment  as  license  fees.    The  greater  part  of  the  remainder 
was  received  from  the  sale  of  lands  and  as  interest. 

The  disbursements  for  the  same  period  were  #2,717,701, 
and  were  principally  as  follows  :  — 

General  rEVenue  warrants  paid f  1,190,140 

Sinking  fund  wacranti  paid   ........         45i776 

State  bunds  paid 83,000 

School  warrants  paid 1,026.493 

Educational  institution  wamnli  paid 130,193 

Stale  huuse  fund  warrants  paid 128,243 

The  total  assessed  valuation  of  all  property  for  1886 
was  8277.1 10,683  :  of  real,  $189,635, 722  ;  of  personal, 
<5S.49>.779;  of  railroad  property.  ?32.4S3.77'S-  The  rate 
of  taxation  was  4^^  mills  on  the  dollar. 

In  1885  the  amount  of  state  taxes  was  $1,044,939;  ^^ 
county  taxes,  $2,863,258  ;  of  city  taxes,  $950,047  ;  of  town- 
ship taxes,  $981,841 ;  of  school  district  taxes,  13,049,936  ; 
in  all,  $8,890,024. 

The  several  state  funds  are  possessed  of  bonds  as  fol- 
lows:  — 

Permanent  ichaol  fund ^3,600,323 

Notroal  school  fund ^lpS9S 

State  Universily  fund 9 ','53 

Stale  Agricultural  College  fund 384.189 

State  Agricultuial  College  note  fund 71.716 

Sin  yng  fund 21.000 

The  stale  has  a  bonded  indebtedness  to  the  amount  o( 
$847,500;  but  of  this  amount,  in  June,  1886,  only  $273,000 
was  held  by  individuals  or  corporations,  the  remainder  be- 
ing held  by  the  fimds  above  mentioned.  The  municipal  in> 
debtedness  of  the  state  for  1SS6  is  given  as  £17,779,299. 


REVENUES  AND   EXPENDITURBS. 


Kentucky. 

In  the  state  auditor's  report  for  the  year  ending  June  30, 
1887,  the  total  receipts  on  account  of  general  revenue  are 
found  to  be  J3, 038, 638  (this  sum,  however,  includes  a  trans- 
fer from  other  funds  of  f  150,000).  Nearly  two-thirds  was 
received  from  the  general  tax.  The  chief  receipts  are  the 
folUowing :  — 

Sheriffs'  revenue  or  general  lax Ji,llS46l 

Railroads 14SP83 

Insurance  campanJM 79-li8 

Insurance  bureau 26.629 

Telegraph  companies 3.00T 

Dislilled  tpiriti ■T-VSS 

Lolieric* 4,000 

Turnpike  tlivi (lend a 26,686 

Licenm  (chiefly  liquor  license;) 276,704 

There  was  received  also  from  a  fiind  termed  the  "  trustee 
jury  fund,"  2164,174,  collected  as  fines,  fees,  etc. 

For  the  same  period  the  expenditures  from  the  general 
fund  are  given  as  $3,058,578.  There  was  paid  in  salaries, 
(154,949;  to  the  school  fund,  $919,111;  to  the  sinking 
fund,  (181,250;  for  criminal  prosecutions,  (190,869;  and 
to  assessors,  (128,036.  A  considerable  sum  was  paid  out 
for  penitentiaries,  which  was  partially  balanced  by  receipts 
from  them. 

There  was  received  into  the  school  fund  (while)  beside 
above  transfer,  a  slight  tax  on  billiards,  cards,  dogs,  and  the 
banks,  and  interest  on  bonds,  amounting  to  (176,248;  and 
into  the  school  fund  (colored),  (12,545.  from  sheriffs'  reve- 
nue, fees,  etc. 

The  assessed  value  of  real  property  for  1887  was  (351,- 


424  STATISTICAL  IlfFORMATIOIf. 

157,053;  of  personal.  ii^J, 334,637;  of  railroad  property,] 
^33, 722,621;  total,  J5i7,2i4,3ii.  The  rate  for  1887  v 
47^  cents  on  every  ?ioo  ;  for  18S6  the  tax  levy  was  5  \  cents.  | 
The  state  has  a  bonded  indebtedness  amounting  to  " 
$694,000  ;  but  the  Agricultural  College  fund  holds  ^165,000 
of  it,  and  the  outstanding  indebtedness  is  but  ;S509,ooo. 
There  are,  beside  these,  slate  and  county  bonds  amounting 
to  ?i, 705,946,  drawing  six  pet  cent,  interest ;  but  they  are 
irredeemable,  and  constitute  an  inviolable  fund.  To  meet 
the  interest  on  the  above  indebtedness,  the  state  has  stocks, 
etc.,  in  the  sinking  fund  to  the  amount  of  2710,744.  The 
State,  therefore,  has  pracdcally  no  debt. 

Louisiana. 

This  state  does  not  seem  to  have  very  efficient  machinery 
for  a  prompt  collection  of  taxes,  as  on  the  treasurer's  boolca 
for  1883  appear  returns  from  taxes  laid  in  1867,  The  re- 
ceipts for  the  fiscal  year  ending  December  31,  1883,  were 
81,907, 152.  From  taxes  proper  was  collected  81,108,755  ; 
from  poll  taxes  (back),  31,073  ;  from  license  taxes,  8273,918  ; 
from  levee  taxes,  8148.061  ;  from  lotteries,  840,000;  from 
sale  swamp  lands,  etc.,  {167,594 ;  from  fees,  818,919  ;  and 
from  interest  on  taxes,  842,759. 

There  was  expended  for  the  same  period,  on  account  of 
all  funds,  81,349,964. 

The  commissions  of  collectors,  etc.,  amounted  to  869,894, 
or  about  4  per  cent,  of  collections. 

The    following  statisrics   are  taken  from  the  "  American    , 
Almanac  "  :  — 

Amount  raised  by  taxation  during  the  year  ending  Janu- 
ary i,  1888,81,565,119  ;  from  licenses,  8265,000  ;  from  auo 
tion  sales,  82285;  from  poll  tax,  87959;  from  propertf 
tax,  81,215,000. 


J^EVEJVUES  AND   EXPENDITURES.  425 

Amount  of  taxable  property  as  assessed  for  1S8G  :  real, 
$149,145,874;  personal,  ^63,579,590  ;  total,  S213, 725,464. 
The  rate  of  sute  tax  for  i886,  was  six  mills  on  ihe  dollar. 
A  poll  tax  of  ti  is  levied  for  school  purposes. 

The  state  debt,  May  i,  1887,  was  2i  1,982,621  funded, 
drawing  interest  at  4  per  cent. 

For  the  year  ending  December  31,  1887,  the  total  re- 
ceipts were  ;Ki,i6i,98oi  the  total  expenditures,  f  1,168,544. 
Nearly  two-thinls  of  the  total  revenue  was  derived  from 
taxes.  The  following  items  are  taken  from  the  treasurer's 
report  for  1887  :  — 

Slate  IM »7«."3 

CoDnly  laxa  (for  itsle  puipoiei,  probably)    .     .    .  9,964 

Railroad  l>i ^.797 

Savinp  bank  [ax 356,430 

Insurance  company  tax 17.294 

Telegraph  and  telephone  company  tax 7>7<x> 

Licenie  fees 11.482 

Shore  centi 3,914 

Duties  on  commission* ^733 

Mune  Benefit  Association 3.118 

The  expenditures  of  the  state  have  not  been  classified, 
but  are  found  to  be  confined  to  the  ordinary  purposes,  viz.  t 
civil  establishment,  schools,  and  charitable  and  penal  insti- 
tutions. 

The  assessed  valuation  of  property  for  1886  is  given: 
real  estate,  ^148,489,143 ;  personal,  ^60, 320, 239 ;  total, 
<2o8,709,38i.  The  rate  of  taxation  for  1886  was  3J  mills 
on  the  dollar,  for  1887  but  aj  mills,  one  mill  of  which  was 
returned  to  the  various  towns  of  the  state  for  school  pur- 
poses. 


STATISTICAL   INFORMATION. 

The  lolal  liabilities  of  the  slate,  January  i,  1888,  were  ' 
Jg, 355,077  ;  of  this,  the  bonded  debt  was  ^3, 559, 000.     The 
state    holds    in    trust   certain    funds   amounting    to    nearly 
^750,000,   upon  which  interest  is   paid.     Interest-bearing 
loans  constitute  the  remainder  of  the  indebtedness.  J 

There  was  in  the  sinking  fund,  December  31,  1887,  bondi^ 
of  the  United  States,  Massachusetts,  and  New  Hampshire, 
amounting  to  3947,800,  and  J  i860  cash.  During  the  year 
1887  the  treasurer  cancelled  all  Maine  bonds  held  in  the 
sinking  fund,  to  the  amount  of  Si, 162,000,  and  beside,  pur- 
chased and  cancelled  others  amounting  to  ^36,000,  leaving  « 
the  bonded  debt  of  the  state  as  above  given. 

Maryland. 

There  was  received  into  the  treasury  of  this  state  durii^  1 
the  year  ending  September  30,  1887,  21,440,363  ;  and  there  I 
was  paid  out  21,374.916.    The  chief  receipts  were  from  — 

Taxes  from  collectors *864,763 1 

Tai»  from  incotporilcd  intlitulions 7(^586 

lKf.es  from  state  and  slate  slocks 44r439 

licenses 521,310 

Taxes  on  commission  of  executors,  etc V'S'i^ 

TaxES  on  collaleral  inherilancei 45iS97 

Taxes  on  gross  receipts  of  Tailcoad  companies     .    .      S3i433 

Fees 11.949 

Fines 14.811 

Dividends  from  banks,  etc 118,934 

Interest  (from  terlain  railways) 94.3no 

Debenture  scrip  of  P.  &  R.  R.R 4S>°ao 

There  was  expended  for  salaries  of  civil  officers,  1)37,295  i^ 
for  various  colleges,  academies,  etc.,  843.565  '•  ^^^  paym 

'  Taxes  from  collectors  mean  the  receipts  from  the  general  state  tn^ 
of  iSJ  cents  on  the  Jioo  of  all  property. 


REVENUES  AND   EXPENDITURES.  427 

of  interest  on  the  public  debt,  J55 1,836  ;  on  account  of  free 
schools  and  state  normal  school,  $509,959  ;  for  the  judiciary, 
^96,540  ;  and  for  charitable  institutions  a  very  considerable 
sum. 

The  assessed  valuation  of  all  property,  real  and  personal, 
for  1887  was  ^485,839,773  ;  corporation  property,  $61,311,- 
375.  The  state  rate  of  taxation  for  1887  was  18J  cents  on 
every  J 100. 

The  amount  of  stocks  and  bonds  held  for  the  use  of  the 
school  fund,  September  30,  18S7,  was  ^1310,986,  and  in 
the  sinking  fund  there  were  stocks  amounling  to  {2,144,216. 
The  funded  debt  of  the  state  on  the  date  named,  was 
$10,960,535,  bearing,  5,  6,  and  3.65  per  cent,  interest.  Sub- 
tracting the  productive  stocks  held  by  the  state  and  sinking 
fund,  the  net  debt  is  {5,661,234.  The  state  holds,  as  an 
ofi'set,  unproductive  stocks  amounting  to  {28,268,781,  and 
{1,876,025  due  from  accounting  officers  and  incorporated 
institutions. 

MassachusetU. 
The  receipts  on  account  of  revenue  for  the  year  ending 
December  31,  1886,  amounting  to  {8,748,652,  were  derived 
chiefly  from  the  following  sources  :  — 

Suieifli f  1,499.805 

Corporalion  lax 1,227,579 

Bank  lax  (savings  and  national) 3,398,267 

Insurance  company  lax 326,336 

Licenses  (insurance) 22,923 

(liquor) 303.798 

'•         (bawkers  and  pedleis) ihpi.^ 

"         (coal  and  mining  companies)  ....  4.777 

Fees  (court,  clerks,  etc.) ,  3°.949 

Income  from  Hoosac  Tunnel 3^3-7^5 

Foreign  railway  company  tax 22,919 

Interest  on  deposit* 40,614 


for    the    year  ^^M 
DOjOoo,  received 


428  STATISTICAL  INFORMATION. 

The  payments  on  account  of  revenu 
amounted  to  19,3 1 7,609.  Of  this,  over  ?2, 
as  corporation  tax,  was  paid  out  to  towns  or  counties ; 
?i, 250,000  was  used  in  payment  of  a  loan;  8597,864  was 
paid  to  the  various  departments,  executive,  judicial,  and 
legislative;  8512,017  to  the  charitable  departments;  {87,948 
for  educational  expenses ;  8461,771  to  reformatory  and 
correctional  institutions;  Jj  76,339  for  public  buildings  £  J 
{75,000  for  certain  improvements,  etc. 

The    receipts   on   account   of  funds   for  the   year  1 
{4,316,704;    the  expenditures   on   account   of  same  were 
{5,5)8,247. 

There  was  in  the  school  fund,  January  i,  1887,  {2,715^ 
944 ;  and  in  others,  exclusive  of  the  sinking  fund,  {633,056^,1 
consisting  of  state  securities,  county  and  town  securities  J 
United  Slates  and  railroad  bonds,  cash,  etc. 

There  was  in  the  sinking  fund  {18,964,412,  the  greats  1 
part  of  it  being  invested  in  state  and  county,  city  and  town  ' 
securities. 

The  total  assessed  valuation  of  property,  January  i,  1887, 
was  {1,847,531,422:  of  real,  $1,340,493,673;  of  personal,   ^ 
1507.037,749-     The  rate  for  1886  was  36^  cents  on  {1000, 

The  total  taxes  raised  in  the  state  for  state,  county,  city, 
and   town   purposes,    for   the   year   ending   May    i,    1888, 
amounted  to  {16,701,437,  or  about  {13.75  per  capita.     No    , 
less  than  91  per  cent,  of  this  was  levied  for  municipal  pur-  , 

The  state  debt,  January  i,  1886,  was  {31,429,680  funded,  I 
all  of  which,  with  the  exception  of  a  small  sum,  bears  i 
tcrest  at  s  per  cent    The  entire  debt  matures  by  the  y 
1900, 


REVENUES  AND   EXPENDITURES. 


MUhigan, 

This  state  has  a  general  revenue  fund,  numerous  educa- 
tional funds,  and  other  funds,  and  the  numerous  transfers 
from  one  to  the  other  of  these  funds  make  the  analysis  of 
thu  budget  a  somewhat  difficult  one.  For  the  year  ending 
September  30,  1S86,  the  tota!  receipts  were,  according  to 
the  treasurer's  report,  83,046,999,  of  which  $2,179,711  was 
received  into  the  general  revenue  fund.  Tlie  chief  items  of 
receipt  were  ;  from  taxes,  51,669,686  ;  from  fees,  S17.313  ; 
from  interest,  833,784;  from  sale  of  slate  lands,  531,522; 
from  dclinqvient  taxes,  redemptions,  etc.,  8191.592;  and 
from  miscellaneous  sources,  S9579.  There  is  also  included 
in  this  sum  transfers  to  the  amount  of  83:9,344.  The  ex- 
penditures from  this  fund  for  the  same  time  were  82,018,143, 
and  principally  for  ihe  following  purposes  ;  for  the  expenses 
of  state  government,  8141,947;  fo''  the  judiciary,  85093; 
for  salaries,  8256,705;  for  colSeges  and  suhools,  8203,711 ; 
for  institutions,  etc.,  8361,604  ;  and  on  account  of  appropria- 
tions, 8468,400, 

To  the  specific  tax  fund  were  paid  the  taxes  on  corpora- 
tions, amounting  to  8812, 711.  Of  this  amount  railroad  com- 
panies paid  8619,399;  fire  insurance  companies,  891,364; 
hfe  insurance  companies,  833,392  ;  and  mining  companies, 
847,565.  These  receipts  were  transferred  to  other  funds. 
The  remaining  funds  are  fed  chiefly  by  the  sale  of  lands  and 
interest. 

The  total  amount  of  taxable  property  as  assessed  in  1887 
is  given  as  8849,921,063  ;  the  rate  of  taxation  12.72  cents  on 
each  8100. 

The  outstanding  bonded  debt  of  the  slate,  Seplember  30, 
1886,  was  8243,149,  of  which  812,149  was  past  due,  and 
not  bearing  interest,  and  8131,000  due  in  i8go,  bearing 
interest  at  7  per  cent. 


430  STATISTICAL   INFORMATION. 

There   is  beside  a  trust  fund  debt  of  ^4,5 11,934,  upon  ■ 
which  the  stale  pays  interest  for  educational  purposes.     To 
meet   indebtedness,  there  was  in  tlie   sinking  fund  st  the 
above  date  f 231,000  invested  in  United  States  a,\  percent.  , 
bonds.  I 

Minnesota.  1 

The  receipts  into  the  treasury  of  this  state  for  the  year 
ending  July  31,  1887,  were  ;S2,476,530,  and  were  as  follows : 
from  the  counties,  $1, 201,223  (^^  ^^^  ^^^  state  purposes 
amounted  lo  but  8642,883,  the  remainder  was  for  school 
and  internal  improvement  purposes)  ;  &om  railroad  compa- 
nies, 8675,745  ;  from  insurance  companies,  #98,365  ;  from 
telegraph  and  telephone  companies,  S10.540;  from  stump- 
age,  $38,403  J  from  school  text-books,  #36,328  ;  and  from 
miscellaneous  sources,  #415,926  (under  "  miscellaneous 
are  included  chiefly  fees  from  inspection,  etc.,  interest,  itn 
penitentiary  receipts). 

The  expenditures  for  the  same  period  were  $2,759,815. 

The  amount  of  taxable  property  assessed  for  1S87  wa«:' 
real,  8381,337,464;  pergonal,  #87.494,258  ;  total,  #469,831,- 
72J  ;  the  rate  of  state  tax,  13  cents  on  the  #100.  The  taxes 
■  for  all  purposes,  state,  county,  and  town,  as  given  by  thftl 
"  American  Almanac,"  have  averaged  1 7.3  mills  on  the  f  i, 
or  S1.73  on  the  #100, 

The  state  loans,  represented  by  bonds,  consisted,  July  3 
1887,  of  #3.964,000  railroad  adjustment  bonds,  of  which  the 
permanent  school  fund  held  #1,981,000,  and  the  permanent 
university  fimd,  #280,000,  the  balance  being  held  by  outside 
parties.  The  permanent  school  fund,  the  iinivefsity  fund, 
and  the  internal  improvement  fund,  together  hold  bonds 
amounting  to  #4,727,783,  there  being,  as  just  slated,  #2,261. 
000  invested  in  state  bonds.  It  is  thus  seen  that  the  boi 
held  by  these  funds  more  than  equal  the  state  debt. 


REVENUES  AND  EXPENDITURES.  431 

Mississippi. 

For  the  fiscal  year  ending  December  31,  1887,  the  lotaj 

receipts  into  the  state   treasury  were  $1,069,568,  as  fol- 

StalelKx >414.77S 

Privilege  tai 141,649 

i„„,i...d=, 563 

License  to  retail  lirinors 109,450 

Swamps  and  overflowed  land  fund ^<J79 

Intemat  impiovcment  fund i.Szo 

Geaetal  slate  fund 10,904 

Chickasaw  ichoul  fund I  ^J9 

Special  insurance  tax 309 

Railroad  privilege 140.316 

Sale  of  bonds 21 1,300 

Sate  of  lands 7>oo4 

Miscellaneoul 450 

Expenditures  were  principally  for  the  following  purposes: 
judiciary, $82, 316;  executive,  ^34,387  ;  common  school  fund, 
1132,624;  interest  Chickasaw  school  fund,  £64,154;  for 
educational  institutions,  £1 18,497  ;  insane  asylums,  $94,673  ; 
railroad  tax  distributed,  $93,446  ;  commission  for  assessing 
all  taxes,  $31,996  ;  principal  on  loan,  $175,000. 

The  amount  of  property  assessed,  1887,  was:  of  realty, 
$90,370,135;  of  personalty,  $39,617,119;  total,  129,887,- 
354.  The  state  tax  on  properly  was  ^\  mills  on  the  dollar. 
The  number  of  polls  liable  to  taxation  were  193,445. 

The  total  stale  debt,  January  i,  1888,  was  $3,752,904. 
From  this  amount  it  is  necessary  to  subtract  the  amounts 
due  the  Chickasaw  school,  the  seminary,  and  cooinion  school 
funds,  because  (he  debt  to  these  is  permanent  and  invio- 
lable, and  also  the  amount  of  the  agricultural  land  script 
fund  which  must  be  permanently  refunded  or  invested.  This 
makes  the  real  debt  only  $1.. 141;. 246. 


STATISTICAL   INFOKMATION. 


Missouri. 


year  end-  ^^^k 
)o  account   ^^^ 


There  was  received  from  all  sources  during  the 
ing  December  31,  1886,  ^3,425, 56a,  the  receipts  00  account 
of  the  state  revenue  and  state  interest  fimds,  J3, 102,007, 
constituting  the  greater  part  of  this  sura.  The  receipts  into 
the  treasury  on  account  of  these    funds  just   named    are 


grouped  under  three  heads  : — 


From 


.'oad.  briilge,  a 

iniicelliiiicuus  sour 


i  telegraph  c 


78.370 
87,817 


I 


Under  the  latter  head  are  included  taxes  on  incorpora- 
tions, of  ^43, 345  ;  on  insurance  companies,  of  fji,Gi9;  and 
fees  amounting  to  Ss^ij, 

Stale  licenses  paid  by  dramshop  keepers  amounted  to 
{151,477,  but  it  does  not  appear  from  the  treasurer's  state- 
ment that  they  were  paid  into  the  treasury. 

The  taxes  levied  for  1886  for  the  state  were:  on  real' 
estate  and  personal  property,  Sz, 810,271  ;  on  railroad,  tele- 
graph, and  bridge  companies,  {198, 398  ;  on  merchants  and 
manufacturers,  8186,357;  in  all,  S3, 205, 026.  ITiere  does 
not  seem  lo  be  close  correspondence  between  the  suras  lev- 
ied and  the  sums  collected  from  the  various  sources.  No 
explanation  has  been  discovered  and  the  facts  are  given  as 
fotmd. 

The  principal  expenditures  for  the  year  from  the  revenue 
fund  were  :  for  pay  of  civil  officers.  Si 99,883  ;  for  assessing 
and  collecting  the  revenue,  ^145,345  ;  for  costs  in  criminal 
cases,  Si49,z62  ;  for  support,  etc.,  of  penitentiary,  Sioo,ooo 
(more  than  covered  by  receipts  on  account  oO  ;  for  educa- 
tional institutions,  $79,000  ;  and  for  asylums,  8244,90 

The    total    assessed   value    of  real    estate    for    iJ 


186  was  ^H 


REVENUES  AND   EXPENDITURES. 


*33 


<Si8,803,ii8;  of  personal  property,  ^181,133,128;  total 
taxable  wealth,  exclusive  of  railroad  and  telegraph  property, 
^699,936,146.  The  assessed  value  of  the  property  of  rail- 
road, telegraph,  and  bridge  companies  was  ^142,847. 264, 
The  rale  of  taxation  for  state  purposes  was  40  cents  on 
the  Jioo.  The  county  revenue  tax  was  J4, 187, 396;  the 
county  interest  and  sinking  fund  taxes,  ?2, 459, 156;  the 
school  taxes,  ^3, 555, 191  \  road,  bridge,  and  drainage  taxes 
^361,618  ;  and  township  taxes,  8389,725  ;  in  ail,  £14,258,1 13. 

The  cost  of  assessing  and  collecting  the  state  taxes  was  a 
little  over  four  per  cent. 

The  state  school  fund  amounted,  December  31,  1886,  to 
#3.i34.440-  aiid  the  state  seminary  fund  to  8519,095  ;  all 
but  8440  of  the  former  and  $95  of  the  latter  being  invested 
in  state  bonds,  bearing  5  and  6  per  cent,  interest. 

The  amount  of  the  state  bonded  debt  at  the  above-named 
time  was  £10,527,000,  bonds  amounting  to  £1,276,000  hav- 
ing been  redeemed  and  cancelled  during  the  two  years. 

Nebraska. 

The  revenue  of  this  state  is  derived  from  taxes,  fees  col- 
lected by  state  officers,  and  from  insurance  companies,  sale 
of  lands,  and  interest. 

The  following  statistics  for  the  two  years  ending  December 
1,  1887,  are  taken  from  the  "  American  Almanac  "  :  — 

Total  receipW    . I3.323.S44 

Total  expenditures 2,822,308 

The  amovint  raised  by  taxation  for  the  year  ending  De- 
cember I,  1887,  was  £1,305,660. 

The  amount  of  taxable  property  assessed,  1887,  was  :  real, 
£96,358,889  ;  personal,  £40,546,015  ;  railroad,  £23,601,362  ; 
total.  St6o,5o6.266.  The  rale  of  the  state  tax  was  81.15 
cents  on  the  £100. 


STATISTICAL   INFORMATION. 


■  debt,  November  i,   1887,  was  1 
t  8  per  cent.    There  was  in  the  1 


The  amount  of  the  s 
S449,z67,  drawing  intere 
sinking  fund  £128,761. 

JVevada. 

The  statistics  given  are  for  the  year  ending  December  31, 
1887,  From  the  property  tax  there  was  received  into  the 
treasury,  8236,855  ;  from  lax  on  proceeds  of  mines,  ?i  3,723; 
from  escheats,  $$  i  ;  from  possessory  claims,  $60  ■  from 
court  fines,  ^3254;  from  gaining  hcenses,  S7546;  and 
from  a  poll  lax  of  $2  per  poll,  ^16,667  ;  total  receipts  from 
counties,  5278,572.  There  was  received  into  the  several 
funds  beside  the  above,  f  188,683,  pnncipaJly  from  land. 
sales,  the  other  receipts  being  on  account  of  fees,  license^ 
interest  on  bonds,  etc. 

The  actual  disbursements  were  (subtracting  transfers  from 
fund  to  fund)  1^392,433. 

The  assessed  valuation  of  leal  estate  was  f  15. 649,537  • 
personal   property,  810,790,670;    net   proceeds   of 
*'.557-'33;  totitl  assessment,  {27,997,340.     The  value  of.. 
railroad  property  was  {9,212,451.     The  stale  rate  was  90' 
cents  on  the  8100. 

The  cost  of  collection  of  taxes  is  about  9  per  cent.  This 
large  rate  is  due  to  the  small  amount  of  collections.  The 
cost  of  collecting  revenues  from  taxes  lends  to  diminish 
rapidly  as  population  and  wealth  increases. 

The  state  bonded  debt,  December  31,  1887,  was  8541,000; 
but  of  this  amount  8380,000  is  an  irredeemable  debt,  held  by 
the  school  fund,  while  ihe  remainder  is  also  held  by  State 
funds,  There  is  cash  enough  in  the  treasury  to  pay  all 
indebtedness,  exclusive  of  the  8380,000. 

The  state  holds  in  trust,  for  the  state  educational  lunds, 
about  81,140.000  in  bonds  and  cash.  Some  of  the  bonds  are 
state  bonds,  the  remainder  United  Slates  four  per  cent,  bonds. 


I 


REVEJ^UES  AND   EXPENDITURES. 


New  Hampshire. 

The  state  received  into  its  treasury  during  the  year  end- 
ing May  31,  1886,  1500,197,  as  follows:  — 

Stale  tm 5400,000 

Railruad  tan ^If^fi 

Inlerest 1,318 

License  fees  (pedlen) S40 

License  fees  (fer(iliiets)  . 550 

Cbarlei  fees 2,025 

Telegraph  tuc... 417 

Telephone  tax a,454 

Escheated  estates 283 

Miscellaneoui 3SS 


Beside  the  above  an  additional  railroad  tax  of  ^99,890, 
a  savmgs  bank  tax  of  K39S.79«,  and  a  non-resident  savings 
bank  tax  of  ^38,833,  were  divided  among  the  several  cities 
and  towns  of  the  stale. 

The  ordinary  expenses  were  {264,442  ;  the  eidraordinary, 
'^31,784  i  and  expenditure  on  account  of  inlerest,  ii  78,764  ; 
a  total  of  {474,990,  The  ordinary  expenses  include  salaries 
and  expenses  whose  payment  is  provided  for  by  general 
laws ;  extraordinary,  those  which  are  authorized  by  special 
acts  of  the  legislature. 

For  1886  the  amount  of  taxable  property  assessed  was: 
real,  {130,298.843;  personal,  $87,813,711;  railroad,  {13.- 
536,711  ;  total,  {231,659,265  ;  the  rate  of  taxation  for  state 
purposes,  19  cents  on  the  ?ioo.  The  average  rate  for  all 
purposes  was  {1.52  on  each  {too. 

The  funded  debt  of  the  state.  June  i,  1886,  was  ^2,936, 
600  bearing  interest  at  6  per  cent. 


436  STATISTICAL   INFORMATION. 

New  'Jersey. 

In  the  comptroller's  report  for  the  year,  ending  October 
31,  1886,  the  receipts  are  grouped  according  to  the  purpose' 
for  which  they  are  intended.  The  following  were  the  princi- 
pal revenues  of  the  state  fund  :  — 

From  railroad  and  canal  corpoiations {778,290 

"     miscellaneoai  corparations 147,415 

"      sUte  prison  reeeipta 61,073 

"     dividmdi 38,870 

"      feci 31,40s 

"     Gne5,ctc a,777 

"      commissions 490 

"     lemporary  loans    ■ 250,(xn 

The  total  amount  received  into  this  fund  was  ji, 303,000, 
The  disbursements  from  tiie  same  were  81,258,861:  oa 
account  of  public  debt,  $90,000 ;  charitable  and  reforma- 
tory institutions,  ^252, 311;  courts  and  crimes,  8339,219; 
state  government,  8235,016;  military  purposes,  8109,042; 
publication,  884,85 1  ;  educational  institutions,  838,194 ; 
scientific  and  sanitary  purposes,  868,049 ;  and  miscellft- ' 
neous  purposes,  842,080. 

There  was  levied  a  state  school  tax  on  property  amount- 
ing to  81,465.268.  Ninety  per  cent,  of  the  nmount  paid 
by  each  county  was  repaid  to  the  county  for  school  purposes, 
and  the  remaining  10  per  cent,  was  apportioned  among  the 
counties  by  the  board  of  education. 

There  is.  also,  levied  a  local  tax  on  railroads  and  corpora- 
tions, which  is  distributed   among  the  several   cities  and 

The  school  fund  and  the  Agricultural  College  fund  have, 

invested  in  bonds,  etc.,  respectively.83,87r.254  and  8ir6,ood, 

It  will  be  noticed  that  all  taxes  were  raised  from  railroads 


I 


REVENUES  AND   EXPENDITURES.  437 

and  other  corporatioos,  except  the  tax  for  school  purposes, 
the  rate  of  which  for  1886  was  j.59  mills  on  the  %\. 
There  is  a  poll  and  property  tax  for  county  and  school  pur- 
poses. The  total  valuation  of  property  assessed  was  #573,- 
356,304- 

The  state  debt  is  represented  by  war  bonds  amounting  to 
^1,496,300,  bearing  6  per  cent,  interest.  A  certain  por- 
tion of  the  debt  is  payable  each  year,  the  amount  being 
f  100,000  until  1S91,  after  which  the  sum  is  variable. 

New  York. 

The  receipts  into  the  various  funds  of  the  state  for  the 

year  ending  September  30,1387,  were  210,521, 194,  of  which 

sum  ^,5x6,543  was  for  the  benefit  of  the  general  fund,  the 

chief  sources  being  the  following  :  — 

Stale  lu f5,Sotr40l 

Taxes  on  cotpuritiont 1,339,864 

Tu  on  organiiarian  of  CDcporotioni 301,664 

Tu  on  collalcFal  inherituices 561,716 

Aaction  duty 18/341 

Suit  duty 58.992 

Fees  (public  olHcen) 3>.]9l 

Fees  (ootaries)       >9-99S 

Finei 3,144 

Inteieit  on  depoiil* ]5.3>o 

Public  land. jl.jSl 

Non-residenl  tues 129.268 

Insurance  deputmenl  (fees) 132,268 

The  total  payments  on  accounts  of  these  funds  were 
^9.529,886,  on  account  of  the  general  fund,  {8,599,886. 
Of  this  sum,  $2,148,928,  the  proceeds  of  a  tax  of  6.3  cents 
on  the  $100,  was  transferred  to  the  canal  fund.  It  is  not  pos- 
sible to  enumerate  even  the  principal  objects  of  expenditure 


J 


i3S  STATISTICAL   INFORMATION. 

The  above  sums  given  as  totals  of  receipts  and  expendi- 
tures are  exclusive  of  receipts  and  expenditures  for  canals 
and  free  schools.     A  part  of  the  receipts  into  the  canal  fund, 
however,  is  included  in  the  account  of  the  general  fund  as 
has  been  noted,  and  so  receives  double  mention,  and 
counted  in  twice.     This  increases  the  seeming  revenue  over  I 
^2, 000,000.     The  necessity   for  such    a  system  of  book- 
keeping is  not  apparent,  and  it  is  suggested  that  a  better  I 
method  might  be  invented  or  found.    Adding  in  the  receipts  I 
into  the  two  funds  named  above,  the  aggregates  become  — 
including  transfers:    receipts,   J17, 829,467;   expenditures,  I 
$16,771,449. 

The  resources  of  the  several  productive  funds  are  given  I 
&s  follows :  — 

Coninion  school  fund Jj.gjo.'S? 

Ulerature  funil 284,:oi 

Unileil  Stales  deposit  Tiuid  ........       4,014.522 

College  land  scrip  fund 473.403 

Military  lecoid  fund 39i>3l 

The  assessed  valuation  of  real  estate  for  1887  w 
13,114,019,314;  of  personal  estate,  S346,oy9,669 ;  total, 
f 3,46 1,139,6 14.  'I'he  rate  of  taxation  for  schools  was 
1,1  mills  on  the  dollar;   for  general  purposes,  1.6  mills. 

The  town  taxes  were  613,975,005  ;  county  taxes,  $34,- 
381,141  ;  state  and  school,  ^g, 075,046  ;  the  aggregate  taxa- 
tion, ?57.33i.i9i. 

The  total  funded  debt,  September  30,  1887,  was  $7,444,- 
310  bearing  6  per  cent,  interest,  nearly  all  being  canal 
debt.  The  amount  in  the  sinking  fiind  was  $4,061,189. 
The  net  debt  is  given  as  $3,505,816,  and  the  amount  in  the 
treasury  on  the  same  date  was  $3,714,907.  This  leaves  a 
net  surplus  of  $109,091.  The  state  is  therefore  practically 
out  of  debt,  and  has  in  addition  the  above  funds,  amounting 
to  over  $8, 000, 00c. 


REVENUES  AND  EXPENDITURES.  439 

North  Carolina. 

This  state  has  two  funds,  the  "  public  fund  "  and  the 

"educational  fund."     Into  the  former  there  was  received 

for  the  year  ending  November  30,  1887,  S847.864.    This 

sum  was  derived  chiefly  from  the  following  sources  : — 

Pablic  laxM {505.613 

Taxes  to  pay  interest 26,386 

Utenses  (drummera') 35,175 

licenses  (Fertilizer) 36,500 

Fees  . 6.53S 

Tax  on  telegraph  and  lelephone  compuiles  .      .     .  I,6ll 

"      express  compunics 385 

"       bank  stock 8,933 

"      insurance  companies 19,036 

Dividends  of  Norlb  Carolina  R.R, I54>674 

Tax  on  gross  receipts  of  same 4i4l9 

Railroad  property  and  francliise  tax 16,391 

The  detailed  list  of  expenditures  covers  one  hundred  and 
thirty  pages,  and  it  has  not  been  found  possible  to  arrange 
and  classify  them  ;  the  total  disbursement  on  account  of  this 
fund,  however,  were  5886,334. 

There  was  received  into  the  educational  fund  86920, 
from  entries  on  vacant  land,  from  an  incorporation  tax,  on 
railroads,  and  from  interest  on  stale  bonds. 

There  were  levied  in  the  counties  the  following  tases  for 
school  purposes ;  on  licensed  retailers  of  Hquor ;  on  white 
and  colored  pulls ;  on  bank  stock,  and  on  dogs ;  11^  cents 
on  jioo  of  real  and  personal  property  ;  amounting  in  all  to 
|6og,303. 

The  total  valuation  of  property  for  1886  was  #302,444,- 
733;  of  real,  ?i36, 883, 381;  of  personal,  <7S, 561, 351.  The 
valuation  of  railroad  property,  franchise,  etc.,  was  ^7,075,- 
351;  this  sum,  however,  is  included  in  the  above  total. 
The  rate  of  the  state  tax  was  3I  mills  on  the  %i. 


[ 


W  STATISTICAL  INFORMATWlf.  ^^H 

Ohio.  ^* 

There  was  received  into  the  slate  treasury,  on  account  of 
general  revenue  for  the  year  ending  November  15,  1886,  the 

sura  of  ?2, 755. 734,  principally  as  follows: —  ^^H 

From  laica,  elc,  (county  tfeasurera)       ....  82.313,254         ^^| 

"      public  works,  rents,  lolls,  elc. 127.35'          ^H 

"     fees  (insurance  companies) 3^,560 

"     fees  (other  sources) l6<993 

"     Buipended  war  claims .  '^590 

"     no'"  »"<!  interest 19,614          ^i 

"     penitentiary  (convict  labor) 315,257         ^^H 

There  was  received  from  sale  of  bonds  {500,887,  whk^^^l 
is  not  included  in  the  above  aggregate.  ^^ 

The  disbursements  for   the  same  period,  on  account  of 
general    revenue,   were   $3,081, 965;   and    were   chiefly    on 
account  of  the  expenses  of  civil  government,  educational  ^h 
and  charitable  institutions,  and  the  penitentiary.  |^^H 

The  sinking  fund  is  supplied  by  a  general  tax  and  sale  ^^^| 
lands,  the  former  amounting,  in  1SS6,  to  ^829,962.  ^^| 

The  common  school  fund  also  receives  a  portion  of  ths^^| 
general  tax,  and  pedlers'  licenses,  the  former  amounting  >V^^| 
1886  to  ji,66o,74z,  the  latter  to  $\  Tii^.  ^H 

It  will  be  seen  that  the  general  taxes  are  the  principal 
source  of  revenue,  ?4, 813, 958,  out  of  a  total  of  £5i775>904, 
being  received  from  them  in  1886. 

The  assessed  valuation  for  1886  was  :  of  realty,  ft, 
106,705;    of  personalty,  i65i5,569,463  ;  total,  51.688,6761 
168.     The  rate  of  the  state  tax  was  z.g  mills  on  the  %\. 

Beside  the  state  tax  there  were  county  taxes  laid  amoui 
ing  to   J8, 372, 519;    city  taxes,  S7, 606,025  ;    school 
^7, 681. 110  ;  township  taxes,  f  1,099.963  ;  total  taxes,  it 
ing  certain  miscellaneous  taxes  in  addition  to  the  above,  1 
for  all  purposes,  ^33, 585,306. 


REVENUES  AND   EXPENDITURES. 


The  foHowing  items  have  been  taken  from  an  ab- 
stract of  personal  property  as  returned  by  the  assessors : 
horses,  ^48,371,124  ;  cattle, ?Z9.490,399  ;  mules, 11,562,1 74  , 
sheep,  f 3,888,430;  hogs,  $5,137,982  ;  carriages,  $8,33 1,763 
watches,  J2, 359, 368;  pianos  and  organs,  JSi"4'03*  ;  ™^f 
chants'  stock,  $44,661,563  ;  bankers,  brokers,  etc.,  $848,465 
manufacturers'  stock,  1(16,023,899;  moneys,  $34,346,612 
credits  after  deducting  debts,  $108,019,000;  property  of 
banks  and  other  corporations,  5105,018,572  ;  other  person- 
alty, $43,216,488.  The  number  of  dogs,  assessed  at  one 
dollar  per  head,  was  206,748. 

The  total  funded  debt  of  the  state,  November  15,  1886, 
was  $3,845,229,  $2,025,139  bearing  6  per  cent,  interest,  the 
remainder  4,  3^,  and  3  per  cent.  In  addition  to  the  above 
there  is  an  irreducible  state  debt,  consisdng  of  trust  funds 
of  over  4^  millions.  The  amount  in  the  state  sinking  fund 
was  $96,337.  Debts  of  cities  of  the  iirst  and  second  classes 
are  given  as  about  41 J  millions,  and  of  counties  6^  millions. 


The  receipts  into  the  treasury  of  this  state  are  distributed 
among  so  many  funds,  that  the  revenues  from  a  given  source 
cannot  without  great  difficulty  be  collected.  From  an  exam- 
ination of  the  treasurer's  report,  tlie  principal  items  in  the 
detailed  list  of  receipts  are  found  to  be  taxes,  income  from 
penitentiaries,  sale  of  land,  and  interest.  The  expenditures 
are  also  unclassified  except  by  funds. 

The  total  receipts  for  the  year  ending  January  9,  1887, 
were  $1,870,264;  the  total  disbursements,  $1,487,780. 

For  1885.  the  taxable  properly,  real  and  personal,  as 
assessed,  was  $77,188,694;  the  rate  of  the  state  tax,  31 
cents  on  the  $100. 


Ml  STATISTICAL  INFORMATION. 

The  notes,  etc.,  held  by  common  school,  agricultural  coI-1 
lege,  escheat,  and  university  funds,  amounted  to  $693,424. 
The  amount  of  the  state  debt  is  $110,000. 


Thb  state  has  no  general  tax  on  lands.    The  following'l 

are   the    chief  sources   of  revenue,  and    from  them   weie] 

derived,  during  the  year  ending  November  30,  1887,  sur 
as  follows  :  — 

Tax  DD  corpomlion  stock,  elc £:. 702,057 

"       gross  receipts  (corporalion) 776,388 

"      stock  of  builis,  safe  deposit  and  trust  com- 

pinies 431.62S 

"      personal  pcoperly 864,355 

"      writs,  wills,  deeds,  etc 117,496 

"      collateral  inherilances ^b2fi•J\ 

"      foreign  insurance  companies 377-57' 

"      net  enrnings  or  income ^f.ifl 

Licenses  (lavern) 565, :64 

"        (eating  houses) 90,989 

"        (wholesale  liquor) 39.E2I 

"        (brewers  and  boltleis) 24>5S7 

(retailers) 405.105 

"         (other  than  above)    .  ' 76.833 

Bonus  on  charters 148,625 

Notaries'  commissions t5<575 

Commutation  tonnage  tax 460,000 

United  Slates  governmenl 172.000  ^^ 

Allegheny  Valley  Kajtroail 312,500  ^^^ 

Fees 61.951  ^1 

The  total  receipts  into  the  treasury  were  17,646,147.  ^^ 

The  payments  from  the  treasury  were  chieily  as  follows : 
expenses    of    government.    51,938,619;    loans    redeemed, 
11.418,511;    interest  on   loans,   $720,277;    penitentiaries,   ^^- 
$138,974;  charitable  institutions,  $780,219;  reformatorieSi  ^^| 


L 


REVENUES  AND   EXPENDITURES.  443 

^330,040;   and  common  schools,  {1,171,813.     The  total. 

expenditures  were  $7,366,763. 

The  valuation  of  personal  property  in  the  several  counties 
and  taxable  for  slate  purposes,  in  1887,  was  $401,079,561, 
the  tax  rate  thereon  being  3  mills  on  the  %\.  This  is  exclu- 
sive of  property  of  corporations. 

The  funded  debt  of  the  state,  December  i,  1887,  was 
{15,691, 600;  the  unfunded  and  non- interest-bearing  debt, 
{147,871  ;  a  total  debt  of  $15,840,471.  Of  the  funded 
debt,  {500,000  drew  mterest  at  6  per  cent.,  {5,233,500  at 
5  per  cent.,  {7,844,200  at  4  per  cent.,  and  {2,114,900  at 
%\  per  cent. 

The  state  has  a  considei-able  sum  in  stocks  of  incorporated 
companies  and  in  the  sinking  fund ;  the  exact  amount  for 
1887  has  not  been  found ;  for  1885  the  amounts  in  these 
together  amounted  to  {8,600,000. 

Rhode  Island. 
In  the  state  treasurer's  report  for  the  year  ending  Decem- 
ber 31,   1887,  the  receipts  are  given  as  {737.751,  the  ex- 
penditures for  the  same  period,  {852,704.    The  principal 
receipts  were  the  following ;  — 

State  tax 1394.237 

Savingi  institulions "4S-'3S 

Insurance  companies 46,027 

Foreign  insurance  aeenis 33.049 

Courts 28,755 

Jailers 4.887 

Pedlera'  licenses 2,855 

Auctioneers 2,154 

Charters 5,750 

Stale  insliluliona  in  Cranatun 39.74' 

Dividends  on  school  fund 12,909 

T»x  on  Klephone  c.impnnies 1,559 

"      telegraph  companies 597 

•■      express  companies  ■    .    • 1.233 


I 

I 


STATISTICAL   /JVFOR.VATfO/J. 


r  special    ^^1 


The  principal  expenditures  were :  on 
appiopriacioos,  $59,820;  for  interest  on  stale  debt,  780,760 
to  commissioners  of  sinking  fund,  Jioo,ooo;  for  public 
schools,  $1 19,989  ;  for  support  of  state  institutions  at  Cran- 
ston, £162,015;  ^^^  salaries,  £86,349;  for  expenses  of  the 
general  assembly,  J2 1,560;  and  for  the  courts,  ti^.^^x. 

'ITie  amount  of  taxable  property  was  as  assessed  for  the 
sUle  lax,  1886  :  real,  £243,658.190  ;  pereonal,  £84,873,369  j 
total,  £328,530,559.  The  rate  of  the  state  tax  was  12  cents 
on  each  £100. 

The  funded  debt  of  the  state,  January  1,  1888,  was 
£1,341,000  bearing  6  per  cent,  interest.  There  was  at  the 
same  date  in  the  sinking  fund  £701,504. 

Scuth  Carolina. 

The  total  net  revenue  of  the  state  for  the  fiscal  year  end- 
ing October  31,  1887,  was  £977,363,  nearly  all  of  which  sura 
was  received  from  taxes  and  on  account  of  phosphate  royal- 
ties, the  former  amounting  to  £707,929  (net),  and  the  latter 
to  £208,786.  Other  items  given  in  the  list  of  receipts  are  ; 
insurance  fees,  £4075  ;  returns  from  the  agricultural  depart- 
ment (probably  fertilizer  fees)  amounting  to  £24,178,  and  ' 
from  the  sinking  fund  commission,  £13,853. 

The  expenditures  for  the  year  were  £969,787  :  £60,845 
on  old  accounts;  £253,710  for  current  expenses;  £355,261 
for  payment  of  interest  on  public  debt ;  £128,781  for  penal 
and  charitable  institutions ;  and  for  miscellaneous  purposes, 
£.7M98. 

The  assessed  value  of  property  for  the  year  1887  was;    1 
real  estate,  £82,943.380;    personal  property,  £41,867,145; 
railroad  property.  £16,263.822  ;   total,  £141,074,347.     The  ' 
rate  of  the  slale  tax  was  4^  mills  on  the  dollar.    The  county 


REVENUES  AXD   EXPENDITURES.  445 

taxes  laid  for  the  same  year  were  $668,788  ;  the  school  taxes, 
?3oo,o64. 

The  following  items  appear  in  the  aggregate  list  of  per- 
sonal property  for  the  year;  horses,  ^3,321,101  ;  callle, 
$1,808,844;  mules  and  asses,  $3,864,212  ;  sheep  and  goats, 
$88,576;  hogs,  $368,365;  watches  and  plate,  $506,117; 
piano-fortes,  melodeons,  or  organs,  $407,315  ;  pleasure  car- 
riages, $1,969,593  ;  dogs,  $336,452  ;  property  of  merchants, 
$6,578,459;  of  manufacturers,  $1,084,587;  manufactured 
articles  on  hand,  engines,  etc.,  $4,440,100  ;  moneys,  $2,157,- 
806;  all  credits,  $3,703,793;  stocks  of  any  company  ex- 
cept national  banks,  $1,559,606;  bonds  not  exempt, 
^'.738,625;    all  other  property,  $7,385,158. 

The  total  funded  debt,  October  31,  1S87,  was  $6,121,938  ; 
the  unfunded,  $276,814;  a  total  debt  of  $6,399, 743.  County 
and  township  debts  were  $2,253,688 ;  city  and  town  debts, 
15,276,083. 

The  sinking  fund  held  sums  to  the  amount  of  $20,000. 

Tinnessee. 
From  December  ao,  1884,  to  December  19,  1886,  the 

receipts  of  the  state  were  $3,581,553,  and  the  total  disbune- 

ments,  $3,291,301. 

The  receipts  were  principally  from  the  following  sources  :  — 

Trustees  (i.r.  general  tax) f  1,231,437 

G>UDly  clerks  (privilege  taxes) 664,1:122 

Other  clerks  (fees.  Einci,  etc.) 66,700 

Insurance  companies 69,012 

Banks 13,126 

Railroads 172,945 

Eipieia  companies 9,080 

Telegraph  companies 754 

Insurance  fees I4.318 

Escheats 5>^77 


446  STATISTICAL   INFORMATION. 

REd?ni|)Iiun  of  laodi f48,69I 

Turnpike  company ^-5^5 

Cenain  milroadi ll,S6o 

The  principal  items  of  disbursement  were :   interest  i 
state   debt,    etc.,   ^1,317,953;  judicial   salaries,  {190,044; 
executive  salaries,  Jas.SjS;  legislative  expenses,  584,000  p 
and  hospitals,  etc.,  2388,0*00. 

The  assessed  valuation  of  property  for  1886  was  :  lands, 
{140,994,711;  town  lots,  *59, 113.554;  personal  property, 
{24,790,914;  railroad  property,  {31,547,582;  toLil,  {256,- 
456,761,     The  rale  of  taxalion  was  30  cents  on  every  ^loo. 

The  debt  of  the  stale   funded  under  an  act  of  March, 
1883,  was,  December  20,  1886,  {11,412,900 ;  6  per  cents.^^^ 
>735,!oo;  5  per  cents.,  {357,100;  3  per  ^cnis.,  {10,330,-i^H 
600.     The  unfunded  debt  amounted  to  {7,548,995.  ^^H 

Texas. 
As  there   are  in   this  state  no  less  than  thirty  diiHeieat 
fiinds  or  accounts,  the  collection  of  revenues  from  one  source 
and  another  into  a  single  sum  is  a  difficult  task,  but  as  to   1 
most  of  the  minor  funds  there  accrued  little  else  than  pro-  i 
ceeds  from  land  sales  and  interest,  attention  will  be  given  y 
to  ijie  two  more  important  funds,  the  "  state  revenue  "  and  | 
"  available  school  "  funds. 

Into  the  former  fund  there  was  received  for  the  year  end- 
ing August  31,  1887,  {2.353,025,  chiefly  from  the  following 
sources : — 

General  taxes fz,li6/>6o 

Special  Qccupalion  tax 77,^24 

General  land  office  (fee*,  elc.) 60.656 

Feci  (office,  indigent,  etc.) 4S.564 

Railroad  cumponics Il.yta 


REVENUES  AND   EXPENDITURES. 


447 


Into  the  available  school  fund  was  received  ^2, 109,695  : 
from  taxes,  S'i069,73S;  from  state  land  board,  2135,000; 
lease  of  school  lands,  ^14,774;  from  interest,  f  817, 5 11. 

The  disbursements  of  the  first  fund  were  on  account  of 
current  expenses,  of  the  latter  for  school  purposes. 

The  lotal  receipts  for  the  year  on  account  of  all  fiinds 
e  55499,043  ;  the  total  disbursements,  84,972,386. 

The  classes  and  value  of  property  returned  for  taxation, 
i  follows:  land,  ^282,599,397 ;  town  Iota, 
$105,226,386  ;  railroads,  ?48,274,237  ;  telegraph  lines,  8576,- 
362  !  land  certificates,  8206,830  ;  sieamboais,  etc.,  $348,040  ; 
carriages,  wagons,  etc.,  $6,697,934  ;  manufacturers'  tools, 
etc.,  $7,251,608  ;  materials  and  manufactured  articles,  $818,- 
403;  horses  and  mules,  $33,166,338;  cattle,  $51,008,550; 
jacks  and  jennets,  $415,471  ;  sheep,  $5,016,674;  goats, 
$493,605;  hogs,  $1,141,655;  goods,  wares,  and  merchan- 
dise, $28,393,104 ;  money  on  hand,  $1 1,827,284  ;  miscella- 
neous, $33,376,809;  total  {adding  approximate  value  of 
lands  in  unorganized  counties  owned  by  non-residents) 
$650,412401. 

The  state  ad  valorem  tax  was  25  cents  on  the  $100  ;  the 
school  tax,  12^  cents;  the  state  revenue  poll  tax,  50  cents 
per  capita;  and  the  school  poll,  $1.  The  taxes  levied  for 
1887  were  as  follows  :  — 

Sum  ad  Kahrtm  (m  (35  cents  on  Ihe  >[Oo)  .     .  $1,626,103 

School  l»x  (12I  cents  on  the  Sioo) 813.119 

Slate  revenue  poll  (50  cents  per  c«iiitn)     .     .    .  173.9^' 

School  poU  (Ji  per  capita) 348.006 


It  will  be  readily  understood  that  taxes  let-Ud  and  taxes 
coUfeted  in  any  one  year  differ  by  very  considerable  sums. 
There  was  collected  in  the  several  counties  an  occupation 


448  STATISTICAL   INFORi/ATION^- 

tax,  no  fewer  than  forty  occupations  being  subject  thereto.    In  J 

the  above  account  of  receipts  into  the  general  revenue,  mei»- 1 

tion  is  made  of  a  "  special  occupation  tax,"  which  is  made  \ 

payable  to  the  comptroller  of  the  state.     The  general  occu- I 

pation   taxes,  however,  do  not  seem  to  be  paid  i; 

state  treasury,  as  no  account  of  them  is  found  in  the  table  o(] 

receipts. 

These  occupation  taxes  collected  in  counties  amounted 
in  1887,  to  $648,555,  the  greater  part  of  which  was  coUecte 
from  liquor-dealers,  viz. ;  — 

Ftdid  retail  liqaor-dealen £395,100 

"    sale  by  quart 62,400 

"     wholesnU  liquor-ileaters 10,200 

"     Iwcr  (icajcrs 45,950 

"     all  other  occupa lions 134.905 

These  occupation  taxes  are  evidently  the  same  thing  s 
the  license  taxes  of  other  Southern  slates,  a  payment  for  the  \ 
privilege  of  gaining  a  livelihood  in  the  occupations  subject  \ 
thereto.     Although  a  lax  is  required  for  engaging  in-  many  { 
occupations,  the  revenues  from  all  save  liquor-dealers  ar- 
small. 

The  state  had,  August  31,  1887,  a  bonded  indebtedness  1 
amounting  to  S4, 237, 730;  but  of  these  bonds  the  greater  I 
pari  was  held  by  funds  of  the  state,  the  amount  in  the  hands 
of  individuals  being  but  $1,245,830.  The  newspapers  report 
that  the  governor  of  Texas  has  called  a  special  session  of  ( 
the  legislature  to  determine  what  shall  be  done  with  a  aut-  | 
plus  of  $3,000,000  which  has  accumulated. 

I  Vermont. 

During  the  year  ending  July  31,  1886,  there  was  received 
into  the  state  treasury,  S5  [8,4')i,  and  paid  out,  $330,646, 
The  principal  receipts  were  as  follows  :  — 


REVENUES  AND  EXPENDITURES.  149 

Stale  tax %\^lfll\ 

Corporation  Im IOO,6S6 

Fees  (probate  jutiges)      .     ,     ■ I2>3il 

County  clerks 29.5^5 

Liceases,  foreign  insurance,  and  fertiliier  companie*  3,844 

The  expendilure  on  accmmt  of  interest  was  f  18,963 ;  in 
payment  of  auditor's  orders,  i.e.  for  current  expenses, 
?3J  1,631 ;  and  in  payment  of  loans,  #36,000. 

Tlie  amount  of  taxable  property  as  assessed,  1886,  was: 
real,  §107,264,665  ;  personal,  #49,927, 597 ;  total,  S'lS?, 192,- 
262.  The  rate  of  the  state  tax  on  property  was  10  cents  on 
each  Si 00, 

The  state  holds  in  trust  several  funds,  educational  and 
otherwise,  amounting  to  over  #500,000. 

The  state  has  practically  no  debt.  The  total  bonded 
debt,  represented  by  6  per  cent,  bonds  held  in  the  Agricul- 
tural College  fund,  is  more  than  covered  by  resources  in  the 
treasury. 

Vir^nia. 

The  principal  receipts  into  the  treasury  of  this  state  were, 
for  the  year  ending  September  30,  1887  :  — 

Real  ralnle  tax ^753,921 

Personal  property  tEU 238,142 

Cajiitalton  lax 160,542 

B.ink  lax 29,961 

Railroad  tax 308,428 

Licenses  (liquor) 244.4 '  3 

License,  (other) 374.608 

Income  lax 20,755 

Insurance  coinpan)'  tax  and  license 3l>^59 

Telegraph  and  telephone  lax  and  licenie    ....  4.356 

Oyster  tax l.?,J29 

Clerks  (court  fees) 77.048 

Finei M-SSO 


I 
J 


4S0  STATISTICAL   INFORMATION. 

The  total  receipts  were  ^2,569,339  ;  the  disbursements,. 
?2, 626,713.  Of  the  latter,  ^743,483  was  paid  out  on  ac- 
count of  public  schools ;  nearly  $400,000  for  lunatic  asy- 
lums, etc.  i  nearly  $500,000  as  interest ;  ^107, 732  to  officen; 
of  the  government;  and  S23 7,978  for  criminal  charges. 

The  assessed  valuation  of  real  estate  for  1887  was 
^257,468, 760;  of  personal  property,  881,873,963;  of  rail- 
road property,  ^35. 700,5 15  ;  total,  8375,043,238.  The  rale 
of  the  state  tax  was  40  cents  on  each  jioo  of  valua 

The  amount  of  the  state  debt,  October  i,  1887,  funded, 
under  act  of  February  14,  1882,  was  829,095,967,  810,000,- 
000  drawing  3  per  cent,  interest,  the  remainder  6  per  cent. 

The  state  has  a  sinking  fund,  but  the  exact  amount  of  itj 
has  not  been  found. 


West  Virginia. 
The  state  has  four  funds,  the  total  receipts  into  which  for 

the  fiscal  year  ending  September  30,  1S86,  were  81,167,514. 

There    was    received  into   the  state  fund,  principally  from 

d)e  following  sources,  8669,668  ;  — 

Sute  tax 8342,858 

jUcense  tu 75i78l 

Ucenae  lux  (on  corporations) 6,Soo 

^nroBit  lax  (slalc) ^5>°35 

itailroBd  (ax  (county  a.ai  district) 129.901 

Railroad  tax  (municipalities) 8,830 

Loan 3S.009 

C  4  0.  R.R aS.79S 

The  expenditures  from  this  fund  were  chiefly  for  ctureat 
expenses,  and  amounted  to  ^672,110. 

There  was  received  into  the  general  school  fund,  from 
general  taxes,  8330,789  ;  from  lines,  81 1,449  '>  f"^""  railroad 
tax,  812,517;  &om  the  C.  &0.  R.R.,2t  1,707  ;  and  conaid- 


I 

I 

I 


REVENUES  AND  EXPENDITURES. 


4S1 


erable  sums  from  interest  and  dividends  on  stocks.  And 
there  was  received  into  ibe  public  building  fund  from  gen- 
eral tax,  ?6i,g39 ;  from  the  railroad  lax,  S6074.  The  total 
amount  received  from  the  general  tax  thus  was  5735,586,  or 
about  two-thimls  of  the  total  receipts,  and  from  the  railroad 
tax  f  183,000,  or  about  one-sixth.  The  amount  of  this  lax 
collected  for  counties  and  municipalities  was  distributed  to 
them. 

The  total  assessed  value  of  property  for  i885  was;  real, 
fn6, 746,529;  personal,  541,768,113;  railroad  property, 
Ji4,488.753;  total,  ^174,003,510.  A  capitation  tax  of  fi 
was  also  laid  for  school  purposes.  The  rate  for  all  purposes 
was  35  cents  on  each  ?ioo, — 10  cents  for  state  purposes, 
10  cents  for  school  purposes,  and  5  cents  for  public  building 
purposes. 

The  school  fund  had  invested  in  bonds,  October  t,  1886, 
S570.473,  1137,511  of  which  was  represented  by  state 
bonds.  The  constitution  provides  that  the  school  fund  must 
be  maintained,  and  certain  revenues  are  set  apart  for  its 
increase.  The  income  from  the  fund  may  be  expended,  but 
any  unexpended  balance  must  be  added  to  the  capital  of 
the  fund. 

The  state  has  no  debt,  the  constitution  forbidding  the 
creation  of  any  debt,  except  in  an  emergency  like  invasion. 
Virginia  claims  that  West  Virginia  should  share  the  ante  bel- 
lum  debt,  but  no  adjustment  has  yet  been  made. 

Wiscertsin. 

Wisconsin  has.  like  several  other  slates,  numerous  funds ; 
but  as  most  of  these  are  fed  by  land  sales  and  interest,  it 
will  be  necessary  to  examine  only  the  general  fund  and,  per- 
haps, the  school  fund. 

The  receipts  of  the  general  fund  for  the  year  ending  Sep- 


4S2 


5  TA  TIS  TICAL   IN  FORM  A  TION. 


tember3o,  1 886,  were  $1,770,265.    Of  this  sum  there  was  n 
ccived  from  counties,  principally  as  interest,  $893,304 ;  i 
corporations,  as  licenses,  $83 1 ,459  ;  and  from  sundry  soui 
$45,501.     Tliere  was  no  general  tax  for  state  purposes  ; 
a  tax  of  about  \\  mills  on  the  dollar  was  laid  for  schools 
and  charitable  inatiimions.     Of  the  total  sum  received  as 
licenses  from  corporations,  $747,870  was  paid  by  railroads. 

The  expenditures  from  this  fund  were  $1,722464,  as  fol- 
lows :  for  salaries,  $881,390;  for  legislative  expenses  (the 
legislature  not  sitting  this  year).  $2038 ;  for  charitable  and 
penal  institutions,  $309,099 ;  for  clerk  hire,  $42,185  ;  for 
labor  about  capitol,  837,700;  for  sundry  purposes.  $489,952. 

Beside  income  from  sale  of  lands,  and  interest,  the  scbocd 
fund  received  certain  fines  and  forfeitures. 

The  valuation  of  property,  as  assessed  for  1886,  was^ 
real,  $398,372,090;  personal,  $104,713,164;  total,  fsoj^-J 
085,254. 

The  school  fiind  had  invested,  September  30,  1886, 
bonds,  etc.,  sums  to  the  amount  of  $2,978,118;  the  univei 
sity  fund,  $190,998;  the  agricultural  college  fund,  $258,597  jj 
and  the  Normal  School  fund,  $1,398,740, 

The  state  has  practically  no  debt,  although  it  has  nora 
nally  a  funded  debt  of  $2,252,000.     There  was  outstanding,] 
September  30,  1886,  but  $1000,  the  remainder  being  coii*9 
verted  into  certificates  of  indebtedness,  and  held  by  thfra 
several  funds  above  mentioned. 


3.    TABLE    SHOWING    RECEIPrs   AND   EXPENDrrURES   OF 

In  the  appended  table  are  grouped  the  principal  leceipCc 
common  to  the  budgets  of  several  states,  and  there  are  a 
^iren   the  total  receipts  and  expenditures   of  the  variot 
It  will  not  be  necessary  to  add  many  explanato 


^^^^H 

^HH 

^^^H 

^1 

u 

' 

J 

", 

onta 

js-;^ 

■XFKHIim'U.                                           ^^^^^^^t 

Al.b.m. 

Jii6,706 

*88«,724 

^^^^1 

Alkansal 

1^(45."  20 

^^^^^H 

Califotni 

1,093,000 

6,476,230 

^^^H 

ColotaiU 

344,096 

918,697  > 

^^^^^H 

Connect! 

:a8,9oo 

1.813,70' 

3,249.597                  ^^^^^H 

Delawari 

32.20CJ 

fji.iyo' 

^^^^^H 

Florida . 

<i.533 

383.843* 

^^^^H 

Geotgia 

2.909,414 

4.2»>,:3o 

4453.393                ^^^^^H 

lllmuis  . 

371  .S34 

3.4  "6.8281 

^^^^H 

Indiana 

r, 927,64s 

4.738.198 

^^^^^H 

Iowa.   . 

379.072 
1. 433.185 

1.663,991 1 

^^^^^H 

Kansas. 

2.566.624 

^^^^m 

Sf",7S7 

3,038,638" 

3.058.578*                       ^^H 

SSS.S'" 

'.907. '5* 
1.161,980 

■■349.964                                ^H 

Maine   . 

33.900 

1.168,544                        _^H 

Marylaj. 

873,785 

2.440.363 

2,374.916                        ^^_^^^M 

Maasach 

1,916,189 

8.748,652 

9.3i7-*>09                            _^H^^H 

Michigul 

377.956 

3,003,423 » 

^^^H 

Minnesu 

501,197 

*^476,530 

1,029.638                         ^^^^^H 

Missiuif 
Missouii 

Nebraski 

262.378 

1,069,568 

Ii2fl&3 

3425-562, 
i.66t,92i' 

^^^^H 

^^^^^H 

Nevada 

2^.187 

467.255 

^^^^^H 

New  11^ 

New  Jeij 
NewVoi 
North  G 

4.870 

500.197 

474.990                            ^^^^H 

951.946 

3.375-327 

3.34I404                            ^^^^H 

6,  n  8.781 
ai  8,603 

17,819,467 
847,864' 

"■i&Ti-           ^H 

Ohio  .    . 

o,.g.„. 

906,393 

5.775.904 
1.870,264 

^^^       ^H 

PennsyN 

1.348.690 

7.646.147 

r.J^.Tej                     ^^^H 

SouVci 

at:S! 

737.75' 
977.363 

969,787                          ^H 

Tenncsm 

■75.494 

1,290.776' 

l.>45.6il  >                                         ^M 

a.io5.o9i 

5,499,043 

tm'.fii-                          ^B 

101.034 

5i8,46« 

3S0.646                           ^H 

458.323 

2.569.338 

^B 

Wiscona 

L 

266.347 

1,167,514 

979.694                              ^H 

".755 

885.132  ■ 

^^^m 

^^^^^1 

'  Privitcp  lu 

L 

1 

REVENUES  AND   EXPENDITURES. 


4S3 


notes,  as  Ihe  reader  will  find  detailed  information  regarding 
the  finances  of  the  states  in  the  preceding  pages, 

The  table  must  be  more  ot  less  unsatisfactory  iti  its 
nature,  for  the  reason  that,  as  above  stated,  there  is  so 
little  unifonnity  among  the  states  in  the  manner  of  keeping 
their  accounts.  The  "  general  tax,"  for  instance,  is  not 
the  same  in  all  states.  In  one  state  it  is  a  mere  tax  on 
property,  excluding  coq>orations ;  in  another,  the  property 
of  corporations  is  included  in  the  general  assessment ;  while 
in  a  third  a  poll  tax  is  inseparably  connected  with  the  prop- 
erty lax.  The  tax  on  railroads  is  sometimes  included  under 
the  head  of  the  genera!  corporation  tax,  sometimes  given 
separately.  The  liiiuor  license  tax,  too,  is  sometimes  in- 
cluded in  the  general  license  tax  and  cannot  be  separated. 
But  the  table  has,  perhaps,  in  spite  of  inexactness,  the  merit 
of  showing  in  a  more  graphic  and  condensed  form  than 
can  otherwise  be  given,  the  chief  sources  of  state  revenues. 

The  total  receipts  of  all  the  slates  as  given  below  are 
^109,543, 870;  the  total  expenditures,  f  107, 299,152  ;  of  the 
territories  (exclusive  of  Alaska),  the  receipts  were  $1,608,71 1, 
the  expenditures  $1,31 7,020  ;  making  thus  the  total  receipts 
of  states  and  territories,  f  11 1,152.582  ;  the  total  expendi- 
tures, $108,616,172.  It  must,  however,  be  remembered, 
that  these  figures  are  merely  approximate.  In  some  cases 
it  has  been  necessary  to  divide  by  two  the  receipts  and  ex- 
penditures, which  were  found  for  two  years.  In  some  cases 
funds  are  necessarily  excluded  which  are  in  other  cases 
included. 


454  STATISTICAL   INFORMATION. 


■  ff  SS  S,  8    ■% 

■  6   6   <i   6   -^     .   d 

i 

III  ...a 

1 

If  III! 11 

1 

ii 

f|lil|4l 

i 

S  l>  8  1  3  I  5  S 

lilililf 
i^liiiil 

\ 

-  -  i  ■  1  ^ 

llililfl 

HE  VENUES  AND   EXPENDITURES. 


I 

S3 
6  i'. 

S^3 


I 

i 

\ 

■R 

«                           ----- 

! 

13 

3  SS-iS.S'ffi'KKg  8  8  8  S,f  8  Si.%  8  k:"=*= 
£                           "" 

j 

jfSSi  as. 8,^8  8  li'5'S'S'8S  K8  3  S,a8  aS,ffS, 

«             ""'"" 

iji 

-^Ilil|li|lf||fl|l||l|| 

13 

1 

:::l::::ll!|IISIHIi!!lll 

1° 

1 

1        5lt;?i;&1,s;-ral-S5s,?Js 

1 

i 

II  Isil^  « 1 11 5  ^  Si  ^^  55  sJ  a  His 

1 


STATISTICAL   INFORMATION. 


34'.)»9.638 


Ki 


*J1.Hj.JS" 


i,ti6,As.,6sj 


83,964.130 


409,017 ,876 

iSiljiSaloa. 
t6ci/»S.B99 

Ml!™.!*! 
,S6..6i,.j, 
4i5.7SO,.9fi 

S.B,>98.Bji 
S09.<lH,»fe 


:^:nj;sj 


a 


337,164  00 

64i,>S3  oo 

66<>.7Mae 

94S.99'  00 


3!st^.711  o 
3,867,167  o 


..l»7i." 


■ 

■ 

^         ^^B 

^^H 

1 

^^^H 

1^ 

■1 

H^                         REVENUILS  AND   EXPENDITURES.               All         ^| 

^^^^^P                                          SCHEDULE                                                               ^^1 
^P       fbwiflf  At  aggrtgatt  vataatian  of  rial  ami  persimal  properly,  tkt        ^^H 

■  stall  a»d  local  laxit  in  Naa  York  ttale.  and  tAi  rate  ptr  cent,  for         ^H 

■  ia(h  year,  from  1S46  to  1SS7,  induihe.                                                      ^H 

I 

ACMTCATK 

s;s 

s;Er 

— -■ 

ilr 

111 

B46 

1 
1 
1 

86. 

B69 

s 

i3 
IS 
!;: 

!S 
!« 

1 

as. 

»6<6.8^,9S5 

fegf 

■ill 

■.j6t,iS4.6ii( 

M3J.309,Jil 
1.404.907,679 
.,404.9'3.67, 
M19.»97.5« 
.,M4.767.4J? 
M49.S01*!* 
■.454.4».6'7 

lis? 

1,967,00.,  lis 

:;;«« 

I  iiiS  1378300 

:,,^,,19.,J. 

i'HI 

3.H4,6a9.3<3 
3.J6...=B..77 

»)70.557  44 

Bis 

'^.9'6  49 

3'"' .775  4" 
».1S7.5J3  So 
=,458,599  .0 
4.3  7*.  167  3S 

iiPii 

vSSSS 

=.976,  >9i  94 

6,7.5,046  39 

«,(*o,ogj  03 
B,6.S,i6,  36 
9i9M.454  S» 
11,311.845  04 

SB 

:^g--6i 

33,. 99. JO.  06 
3S.95',8J7  i6 
sBiosilsos  '3 

4)^33  ,.70  75 
4',175.»05  »1 

S»2 

$4,647.46.  88 
4,843.6.5  to 

3a;  a 

lj^6i^  ?S 

;i;g:;il|! 

39,873*4. 16 

46,s.8*».  6. 

iiii 

49,.86,77a  SS 

uafsss 

K;S:SS 

i7.3J'.'9'  SR 

^1 

:» 

0.6=7 

ll 

ll 

ll 

:i 
..83B 
..J09 

li 

L 

J 

STATISTICAL   ISFOKMATION. 


7.    REVENUES  OF   NORTH 


Skeviing  Ihe  ameuni  0/  Retiipli  anJ  Disbursemtnli  ef  tht  Slate  if  1 
North  Carolina /or  tack  Fiscal  Year  from  iSbS  !<•  tSSj  indmivt. 


^ 

™.. 

— 

■Ecum. 

TOTAtOU- 

R™pu. 

D»bu«- 

R=«ip(i 

„. 

iBb8 

$1,915,564  98 

J./..9.909  *■ 

$,1,564  64 

$3S.e6«  B. 

S.rt"7.«»9  6, 

$5«3.7SS  «• 

:Be,' 

8,ss-,ej7  <•' 

B,6S7,4>B  97 

.69,870  «> 

167..58  .8 

B,7».J4S  04 

8.Bj4.s8t  i» 

.870 

3, s 57 .8*7  48 

3,454,314  I a 

333,971  7* 

x>}.4ll  01 

3.B91.S41  .4 

3.657.6.5  .< 

.87. 

S53.U7  38 

645,579  79 

"»9,W  79 

7Ba..j8  ., 

SIJA77  9" 

i%n 

6S4.47«  " 

6iB,5]i  7° 

7°°.4I7«> 

iBjl 

48.. «4  9' 

5".'M  » 

41.705  ai 

ei.™7.8 

S".999  9> 

fc7.'7S  6> 

1874 

667...*  « 

448,839  M 

44.384  » 

s6,:rfo  94 

7'M9«  T 

5043*96. 

1875 

50«.lt7  67 

Si', 8.6  78 

.3.677  oB 

55' ■994  71 

189.776  n 

,876 

S>4,°]9  '7 

518.055  13 

41. '3  5  sg 

54.7"  93 

566.37476 

i8..758  .J 

.»T7 

533 .6)S  S5 

33,783  S7 

«37.*9J  69 

1B78 

;}},}»  Dt 

SM.'87  07 

".S9»  39 

4.9. S  °3 

S4S;9.4  43 

539.'"  1- 

.»79 

577,658  41 

5J696S 

4,074  9« 

558.609  60 

S8..733  3. 

iBSo 

m6,7?*  04 

49"  .7"  33 

6.-33  47 

4.000  «. 

55)AI9  ]t 

496.7"  33 

■  8S1 

441.74}  "5 

6>s.6.6  59 

1.4,501   3. 

50.65.  .; 

760..44  36 

676^*7  «, 

t«^ 

7SS,88,  4, 

6^...«  37 

J«.J9.3  *9 

691.337  71 

.88, 

965."'7  '■a 

»9.879  3° 

13501 

9M,«8S38 

M4-78|« 

.Bl4 

l.«6.775  « 

785.64,  78 

76.M8  65 

86..eT"« 

>38s 

378.9S7  6= 

795,486  MS 

7.'76  M 

386,134  .6 

a»,6a>  4>i 

l8S« 

S3S.4«  =3 

..I... 6s.  }> 

7.6.6.5 

7.36s  81 

843,047  .8 

i.t8<v>.r  >( 

.887 

847.864  36 

SS6.3J4" 

6.9»4e 

1.3*4  « 

BM-784  »4 

89>.8)a  n 

ROYALTY  FROM  FUOSPHATB   ROCK. 


8     BOVAL'n-    mow    PHOSPHATE   ROCK   IN  SOUTH 


On  ihe  rice  plantations  along  certain  parts  of  the  South 
Carolina  coast,  the  planters  noticed  smooth,  dark-colored 
nodules  of  rock  scattered  over  the  fields.  They  could  see 
no  good  in  them,  and  grumbled  at  being  compelled  to  pile 
them  out  of  the  way  of  the  plough.  Among  these  rice 
planters  on  the  Ashley  River,  a  few  miles  above  Charleston, 
was  a  young  geologist,  —  Francis  S,  Holmes,  —  whose  atten- 
tion was  directed  to  these  nodules  in  1837  by  the  "beauti- 
fully preserved  forms  of  shells,  teeth,  and  bones,  mingled 
with  the  rocks  filled  with  the  casts  of  shells,  corals,  and 
corallines."  For  sevral  years  he  collected  and  preserved 
many  of  these  specimens.  The  use  of  mad  as  a  fertilizer 
for  the  South  was  very  widely  discussed,  and  in  1843  the 
AgriculWral  Society  of  South  Carolina  recommended  the 
farmers  to  search  for  marl  beds.  In  common  with  many 
other  planters,  Mr.  Holmes  sank  a  pit  for  this  purpose  on 
his  land,  and  came  across  a  stratum  of  the  same  nodules  a 
few  inches  below  the  surface,  and  the  situation  of  the  phos- 
phatic  deposits  was  established.  On  finding  stone  arrow- 
heads and  hatchets  in  this  layer,  he  thought  he  had  made 
a  discovery  that  would  aid  in  fixing  the  age  of  the  deposit ; 
but  an  older  geologist  derided  the  conclusions  drawn  from 
this  fact,  and  stated  that  these  specimens  might  have  got 
in  the  stratum  by  accident  through  a  hole  from  an  upturned 
tree  or  the  burrowing  of  an  animal.  Afterwards  he  camt 
across  human  bones,  but  carelessly  threw  them  away,  think- 
ing that  they  found  their  way  there  by  accident,  just  as  the 
older  geologist  had    explained    the    position   of  the   stone 


160 


STATISTICAL   INFORMATtOH. 


I 


implements.  These  discoveries  really  fixed  the  palteontolo* 
gical  age  of  the  post- Pleiocene  beds,  as  the  prehistoric  age 
of  man;  but  Professor  Holmes  never  felt  safe  in  drawing' 
this  conclusion  until  he  read  the  work  of  an  English  geolo-'^ 
gist,  —  Professor' A  ns  ted,  —  onthe  same  deposJB  in  England. 
It  is  interesting  to  note  that  the  age  of  this  formation  was 
established  in  South  Carolina  in  1844,  while  the  discoverirs 
for  the  determination  of  the  age  of  the  same  formation  iit>i 
Europe  were  not  made  until  1854.  | 

Although  the  situation  of  the  beds  was  thus  established^ ! 
no  one  suspected  them  as  being  of  any  commercial  value 
but  the  knowledge  would  have  been  blundered  into  had  it 
not  been  for  the  wise  reasoning  of  the  scientist.     An  old- 
planter  in  1843  resolved  lo  see  if  these  piles  of  nodules  oB' 
hb  land  could  not  be  made  serviceable.    At  a  considerable., 
expense  he  pounded  up  and  ground  into  powder  a  large 
quantity  of  them,  and  was  going  to  scatter  it  on  his  land,, 
when  the  scientist,  Mr.  Ruffin,  again  stepped  forward,  aodl 
prevented  a  discovery  that  was  not  made  till   thirty  yei 
later.     He  advised  him  to  throw  the  powder  away,  since 
could  possess  no  fertilizing  properties. 

After  these  two  checks  by  the  scientists,  nothing  mort' 
was  done  till  the  close  of  the  Civil  War.  In  1867  Dr.  N, 
Pratt,  a  distinguished  chemist  from  Georgia,  analyzed  a 
specimen  of  the  rock,  and  found  that  it  contained  a  large 
percentage  of  phosphate  of  lime.  Other  specimens  gathered 
from  tlie  IJelds  showed  as  high  as  sixty  per  cent.,  and  he 
knew  that  he  had  made  an  important  commercial  discovery. 
At  this  lime  fertilizers  were  being  very  widely  introduced 
into  the  South,  and  phosphate  of  lime  was  a  valuable  ele- 
ment in  its  manufacture.  Doctor  Pratt  anti  Profess(» 
Holmes  tried  unavailingly  for  six  weeks  to  induce  the  ca[»> 
tahsts  of  Charleston  lo  undertake  the  development  of 


cai».     ^ 
>f  the  ^^H 


ROYALTY  FKOM  PHOSPHATE   ROCK.  461 

industry.  They  then  did  as  enterprising  Southerners  without 
capital  have  so  often  done  since  the  war  :  they  went  North 
and  showed  the  advantage  of  it  to  Northern  men  of  means, 
and  (wo  gentlemen  in  Philadelphia  were  the  first  lo  invest. 

Of  course,  theories  have  been  advanced  to  explain  these 
deposits.  It  was  supposed  that  they  were  the  remains  of 
animals  drifted  there  during  the  glacial  periods,  but  the 
advocates  of  this  view  overlook  the  fact  that  the  nodules 
are  geological  rock,  and  not  the  fossilized  remains  of  ani- 
mals. The  theory  the  most  generally  accepted  is  that 
advanced  by  Professor  Holmes.  The  Eocene  marl,  in  this 
theory,  is  the  foundation  of  the  whole  seacoast  land  of  South 
Carolina,  and  in  the  ages  past  extended  out  under  the  ocean. 
The  mollusca  and  other  animals  bored  into  it.  and  honey- 
combed it  to  the  depth  of  several  feet.  The  pieces  were 
broken  off  and  rolled  shoreward  by  the  water,  and  iinally 
left  in  basins  hollowed  out  in  the  sand.  This  action  of  the 
water  accounts  for  their  smooth,  nodular  appe:trance.  When 
the  land  was  raised,  these  basins  became  inland  lakes,  and 
as  evaporation  took  plate,  a  layer  of  salt  remained  at  the 
bottom,  covering  the  stratum  of  nodules.  But  the  large 
percentage  (sixty)  of  carbonate  of  Urae  in  the  original 
Eocene  marl  has  been  nearly  all  converted  into  phosphate 
of  lime  in  the  nodules.  Two  theories  have  been  ailvanced 
to  explain  this  change  of  structure.  One  attributes  it  to 
the  action  of  phosphoric  acid  which  was  generated  from  the 
f£ces  and  remains  of  animals,  vast  herds  of  which  were 
attracted  to  these  salt-beds  as  to  salt-licks.  But  this  was 
rejected  since  nodules  the  jioorest  in  phosphate  of  lime 
were  found  in  the  midst  of  the  most  of  bones.  The  other 
theory  assumes  that  certain  mollusks  largely  wrought  this 
change  by  their  power  of  secretion  before  the  nodule  es- 
caped from  the  action  of  the  sea-water.     This  was  assisted 


*62  STATISTICAL  INFORMATION. 

by  chemical  agents  after  the  removai  of  the  deposits  beyond  I 
the  action  of  the  tides.  This  is  a  general  cause,  not  a  local 
one  like  that  connected  with  the  supposition  of  salt-Ucks, 
and  harmonizes  with  the  wide  distribution  of  tlie  formation. 
The  occurrence  of  these  deposits  is  confined  to  the  tide- 
water country,  reaching  from  North  Carolina  to  Florida  and 
extending  sixty  miles  inland  in  some  cases,  but  none  are  found 
at  an  elevation  above  that  of  mean  high  tide  supplemented 
by  the  action  of  storms.  No  careful  survey,  unfortunately, 
has  ever  been  made  by  the  state,  but  Professor  Shepard,  of 
Charieston,  in  1880  approximately  placed  their  extent  al 
two  hundred  and  forty  thousand  acres,  of  which  he  consid- 
ered only  ten  thousand  accessible.  Estimates  of  the  quan- 
tity, in  consequence,  vary  from  five  million  to  five  hundred 
million  tons.  The  first  is  Professor  Shepard's  estimate,  and 
now  that  amount  has  already  been  mined  without  any  hint 
of  failure  of  supply.  The  average  yield  per  acre  on  land  B 
eight  hundred  tons.  The  formation  is  known  as  land  C 
river  rock,  according  to  the  element  in  which  it  i 
The  land  rock  occurs  from  two  to  ten  feet  below 
face,  in  a  layer  averaging  about  eight  inches  in  tbicknea 
and  composed  of  nodules  varying  to  size  from  a  potato  trf? 
several  feet  in  diameter,  and  in  weight  from  a  few  ounces " 
to  a  ton.  It  is  very  simply  mined  by  removing  the  overly- 
ing earth  and  securing  the  deposit.  The  river  rock  is  gath- 
ered by  hand  picking  in  shallow  water,  by  diving  in  a  depUl-.j 
of  ten  or  twelve  feel,  and  by  dredging  in  a  depth  beyond 
that  to  twenty  feet.  The  industry  has  been  a  great  boon  t 
labor,  as  common  workmen  make  ^1.75  a  day,  while  diven  '" 
have  earned  as  much  as  J18  per  week,  though  working  not 
more  than  six  hours  a  day,  owing  to  the  tides.  The  rock  is 
washed  usually  by  expensive  machinery,  and  dried  often  by  <■ 
hot-air  process,  and  then   is  ready  either  for  shipment  e 


•on^^H 

iveis'^^ 
not 

:kis 
a  otten  by  ^^h 
lipmem  >>i|^H 


ROYALTY  FROM  PHOSPHATE   ROCK.  16J 

manufacture.  The  average  price  per  ton  has  been  about  six 
dollars,  and  the  value  of  this  product  in  iSH;  was  more  than 
three  times  as  great  as  that  of  the  precious  minerals  mined 
in  all  the  Southern  states.  The  total  value  of  the  raw 
product  has  been  at  least  J3 0,000,000. 

When  the  industry  first  began  to  be  developed,  the  atten- 
tion of  capitalists  was  chiefly  directed  to  the  land  rock,  and 
even  up  to  1880  the  yield  from  the  river  beds  was  only  half 
of  that  from  the  Iari3  deposits,  but  in  1887  it  was  nearly 
equal  to  that  from  the  other  source.  The  bed  of  all  navi- 
gable streams,  and  generally  all  salt  marshes  between  high 
and  low  water  mark,  and  some  additional  swamps,  lands, 
and  streams  were  claimed  by  the  state,  and  the  term  rittr- 
rock  is  often  applied  to  the  slate  phosphate  possessions. 
The  state  at  the  beginning  placed  a  royalty  of  one  dollar 
per  ton  on  her  deposits,  but,  even  with  this,  it  was  found 
more  profitable  to  mine  the  river  Ijeds  and  pay  the  royalty 
than  to  invest  in  the  enterprise  on  land.  The  plan  was 
adopted  of  leasing  certain  defined  territory  to  a  company, 
and  of  issuing  hcenses  to  private  persons  to  gather  from  the 
state  possessions.  The  leases  have  l)een  given  for  various 
times,  from  six  months  to  thirty  years.  The  royalty  is  uni- 
form, and  complaint  has  been  made  of  the  unfairness  of 
requiring  rich  and  poor  deposits  to  pay  the  same  burden. 
This  could  be  obviated  by  selling  the  right  to  mine  in  any 
given  limits  at  public  auction,  but  nothing  has  so  far  been 
done.  The  state  control  of  this  interest  has  been,  on  the 
whole,  successful.  Up  to  1879  the  cost  of  collection  was  a 
httle  over  five  per  cent.,  and  since  then  the  machinery  of 
the  Department  of  Agriculture  has  heen  utilized  for  the  pur- 
pose, and  the  cost  is  practically  reduced  to  almost  nothing. 
The  total  amount  of  rock  from  both  sources  is  nearly  four 
and  a  half  million  tons,  of  which  almost  one  and  three- 
fourths  million  tons  were  from  the  river  rock. 


I 


46t  STATISTICAL  INFORMATION. 

The  following  table  shows  the  total  amount  of  royalty  U 
date:  — 

RBcurrs  of  Phospbatk  Royalty  from  1872  to  1879. 

Under  Inspicten  of  Phosfhatts. 

1871  la  1877.     (Both  iocliuive.     See  Report  of 

Attomey'Geacial,  Reports  and  Resolutions, 

1877-78) ^307^3.30 

187S 93.115-98 

1B79  (partly  back  royalty} 137,507^7 

RBcmpra  of  Royalty  fbom  iSSo  to  1885, 
Under  Difiarlmenl  of  AgrUullurt. 

i88t» *6S.337-9a 

1881 I24.S4II4 

188! 138.354-14 

1883 "35.79341 

1884 153.797-6* 

'885 '76.754^' 

^784,479.14 

iSSa 196,089.88 

1SS7 308,842.61 

*i.i  89,411. 63 

Grand  total ^i,7i7.<:>77.38> 

'  The  revenues  of  the  state  government  for  three  yean  wen  ■ 
follows :  — 

ig7"-tBM  (bolh  iodiuin) SiD,i}>,SSt  n 

l8So S47.Ii«  7* 

■  «Si rt'.jjo  i» 

'»«' 8S=J4»  J« 

'*83 vo»if,  3B 

ttU fgS,nt  * 

lUj H«.aii6  65 

'"» 8.o„n« 

»**7 »77.iflj  7* 

QniidlDUl $T6,S8S,]t6n         ^^| 

The  stale  expenditnrea  were  abnormally  high  to  1877  on  aecoDiit  dl^^| 
the  entrnvsgatice  of  the  party  in  power.  j^^| 


ROYALTY  FROM  PHOSPHATE  ROCK. 


46S 


One  company  paid  nearly  five-sixths  of  the  royalty  for 
i88i,  though  there  were  several  others.  This  source  of 
revenue  has  gradually  increased  from  less  than  one  per  cent, 
to  more  than  twenty  per  cent,  of  the  gross  revenues  of  tlie 
state  in  1887.  At  first  the  returns  were  made  on  the  dried 
rock,  but  in  1882  it  was  very  properly  provided  that  the 
basis  should  be  the  cn'de  article. 

Although  the  state  engages  in  no  productive  enterprise  of 
importance,  the  temptation  to  assume  direct  control  of  this 
interest  led  Capt,  J,  C,  Seegers,  of  the  House  of  Representa- 
tives, to  introduce  a  bill  in  the  legislature  in  1887,  providing 
for  the  direct  management  of  the  industry  by  the  state,  to 
be  worked  with  her  convicts.  The  title  of  the  bill  reads : 
"  To  exempt  from  taxation  all  property,  real  and  personal, 
within  the  state  of  South  Carolina,  and  to  utilize  the  re- 
sources of  the  state,  especially  her  phosphate  beds  and  cod- 
vict  labor,  in  the  stead  thereof."  He  also  intended  the 
crude  rock  to  be  manufactured  into  fertilizers  by  the  state. 
The  plan  seems  plausible.  There  are  over  a  thousand  con- 
victs, nearly  all  of  them  able-bodied  negroes  accustomed  to 
such  rough  work  under  a  hot  sun.  They  are  more  easily 
controlled  ihan  whites,  and  there  is  no  danger  of  a  general 
outburst,  under  a  vigilant  overseer.  They  have  been  worked 
in  chain  gangs  in  building  railroads,  and  though  there  was  a 
great  outcry  of  inhuman  Ireatmenl,  yet  this  was  probably 
due  to  lack  of  proper  oversight  by  the  penitentiary  authori- 
ties, rather  than  inherent  in  the  system  itself.  The  average 
cost  to  the  state  of  maintenance  of  the  convicts  is  about 
twenty-five  cents  a  day.  The  phosphate  companies  do  not 
pay  less  than  a  dollar  a  day  for  their  hands,  and  this  allows 
a  wide  margin  for  alleged  difference  in  efficiency  of  manage- 

tment  between  private  and  public  control.     Some  of  the 
companies  pay  the  royalty  and  stilt  make  large  promts,  — 


466  STATISTICAL   INFORMATION. 

sometimes,  it  is  slated,  from  thirty  to  fifty  per  cent.,  —  and 
the  state  ought,  with  the  advantages  of  cheaper  labor,  to 
make  larger  profits.     The  profits  to  the  state  from  mining 
and  manufacture  might  be  one  dollar  per  ion,  besides  the 
royalty.     I'hen,  if  the  yield  should  be  increased  to  five  htm-  ■ 
dred  thousand  tons,  as  Captain  Seegers  thought,  the  entire  -J 
expenses  of  the  state  government  would  be  met,  and  taxa-  -T 
tion  for  state  purposes  be  abolished.    Nothing,  though,  so  I 
far  has  come  of  the  bill  except  an  almost  unanimous  defeat.*  I 

9.    ONONDAGA  SALT  SPRINGS. 

The  Onondaga  Salt  Springs  Reservation,  a  tract  of  landl 
about  ten  miles  square,  including  the  city  of  Syracuse,  one  C 
or  two  neighboring  towns,  and  Onondaga  lake,  was  ceded  I 
to  the  state  of  New  York  by  the  Indians  in  1795,  in  consid-  \ 
eration  of  a  cash  payment  of  Si 000,  and  annual  royalties '1 
of  S700  and  150  bushels  of  salt.  The  stale,  by  this  treaty,  f 
is  bound  to  hold  and  work  the  property  forever.  Under  an  1 
act  of  1797.  this  property  was  surveyed,  divided  into  lots  J 
of  ten  acres  each,  and  leased  to  "squatters"  then  in  occu- 
pation. Each  lessee  was  required  to  manufacture  ten  1 
bushels  of  salt  per  annum.  At  the  same  time  a  tax  of  four  I 
cents  per  bushel  was  imposed,  and  a  superintendent  ap-  I 
pointed,  by  whom  the  salt  was  inspected  and  stored,  the  I 
state  receiving  in  addition  to  the  above,  one  cent  extra  for  I 
storage.  The  brine  was  at  this  time  raised  by  the  individual,,! 
the  state  permitting  one  manufacturer  to  use,  if  needed,  the  | 
surplus  of  water,  when  his  neighbor  had  all  he  wished. 
i8og    the  duty  was  fixed  at  three  cents.     In  1817  it 

■  Auihoiiiie^:  Handbook  of  South  Carolina,  iuufd  l<v  ilie  H«le;>J 
rhe  Phosphate  Rocks  of  Soulh  Carolina,  by  F.  -S.  ll.iliiies:   I 
Commisiion  of  AgricuUure  of  Soulh  Carolina  f.'ir  iSSo;    Review  of  I 
Opentiuni  of  Depurlment  of  AgricuUure  fur  18S5. 


ONONDAGA   SALT  SPRINGS. 


467 


raised  to  twelve  and  a  half  cents,  in  order  to  aid  in  the  pay- 
ment for  the  Erie  Canal.  A  sum  of  $2,055,458.06  was 
thereafter  contributed  from  this  revenue  for  the  construc- 
tion of  canals.  From  1817  to  1835  the  Superintendent 
reported  to  the  Commissioner  of  the  canal,  but  after  the  latter 
date,  to  the  legislature.  In  1822  a  bounty  of  three  cents  per 
bushel  was  placed  on  coarse  salt  delivered  on  the  Hudson  or 
the  lakes,  the  laborers  in  the  salt  work  being  also  exempt  from 
jury  and  military  service.  The  duty  was  reduced  to  six 
cents  in  1834,  and  to  one  cent  in  1846,  and  has  since  re- 
naained  the  same.  The  state,  in  return  for  this  duty,  sinks 
wells,  raises  water,  furnishes  it  to  the  manufacturer,  and 
inspects  and  weighs  the  salt. 

In  1859,  on  account  of  frequent  troubles  among  the 
manufacturers,  leases  were  issued  to  them  for  thirty  years. 

The  salt  springs  were  at  one  lime  true  springs,  but  from 
the  increased  consumption  of  the  brine,  it  has  become  nec- 
essary to  sink  wells. 

Of  late  the  industry  has  been  much  depressed,  owing  lo 
competition  with  foreign  salt,  and  with  the  Michigan  salt. 


326.43 

1.643. 

In  1797     .    . 

.       25,474  bush. 

In  .847     .    . 

3,951.355  bush 

"  .807    .    . 

.      175.448    " 

•■   .858    .    . 

7.033.391     " 

"   1817    .    . 

.     408,655     " 

"   1862  (am.) 

9.OS3.874    " 

"  .827     .    . 

.     983,410    " 

"   1872     .    . 

7,93°.9*S    " 

"  «837     ■    - 

.  2.167.287     " 

"  1B86    .    . 

6,101.757    " 

L 


Since  1861  there  has  been  a  decline,  the  average 
1872  being  about  8,000,000  bushels,  and  from  1873-1 
7,200,000  bushels. 


down  to       ^^1 
'3-1886,      ^H 


STATISTICAL   INFORMATION. 


1846 #7,705  48 

1847 9.7'7  &3 

.    .    .  aM9i  46 
.    .    .  ao,is3  ^ 

.    .    .  .5..04  S7 
.    .    .  13.337  5S 

■     ■    ■  "9.557  '9 


'867 »2S.o89  73 


UW    PAID    ^^H 
D   TO   OHX     ^^H 


IS49 
1850 

■  S5I 

■  853 
1853 
1854 

i8ss 
1S56 
1857 
185S 


.    ■    -  33,711  57 
.    ,    .  10,867  46 
■    ■    ■     9.690  79 
(deficK.  fa,fio5  01). 

<9.766  93 

37.3°6  38 

ia.342  50 

.    .    .  36,761   38 

.  .  .  49,696  31 
.  .  ,  38,064  94 
.   .   .  29,906  96 


.  i8,6iQ  59 
.  24.557  48 


0 »44'l  3» 

I 34.507  08 

2 33.99'  78 

3 "5.130** 

4 3,106  8S 

5 5.903  66 

6 4.871  08 

7 y-*"*  99 

8 14.S03  43 

9 ^3.">  6* 

o 1.313  » 

I ".045  5» 

3 ai.a04  30 

3 *0S6  03 

4 3.4S*  5S 

5 5.349  59 

6  (delicil,  S7,oi  1  79). 


1863 
1863 
1S64 

iS6j 
1866 


The  total  net  revenue  derived  from  the  manufacture  from 
1818  to  1886  (inclusive)  =  J4,ig6,664.5o.' 

'  The  facts  presenlcd  concerning  (he  sail  springs  of  New  York  h 
been  gathered  ftom  the  tcpucu  of  the  Unundaga  Salt  Spring  Com- 


REVENUES   AND   EXPENDITURES  OF  CITIES. 


,    BUDT.EIS    OV    BALTIMORE,    BOSTOK,  CHICAGO,  NEW  YORK, 
PHILACELPHU,   AND  ATLANTA. 


£a/timore. 

THE  gross  receipts  into  the  treasury  for  the  year  ending 

December  31,  18S7,  were  ^8,446,439,  and  were  chiefly 
from  the  following  sources :  — 

T»xe» *4.aio,iia 

Publk  schools,  toiiion  fees,  etc 6,766 

Mnrkel  hoiues.  rent  of  stalls 5^,287 

Wharfage  and  rem  of  whurves 33.561 

GeneiaJ  license* 44i^ 

Auction  duties 7,43! 

Dividends  on  stock  in  B.  &  O.  R.  R.      ....  IJD,oao 

W»ter  cenls 74S.44<^ 

Passenger  railway  compsnia 132,167 

From  the  itstc  for  public  scboola >47-403 

Temporary  loan 1,510,000 

Receipts  to  pay  interest  on  loans 896,704 

Sale  of  stock Hl-^S 

The  total  disbursemenls  were  {8403,930.  Of  this 
^4,541,357  was  spent  on  account  of  expenses  of  city 
government,  the  following  being  the  principal  items  of 
expense: — 

Interest  on  the  pablic  debt f9iS.987 

Eipenscs  of  Uv  courts    .    .    • 118,806 


470 


STA  T/S  TICAL    INFORM  A  TION. 


Expenses  of  jail  magislrates,  etc (103.587 

Public  schtmli  (leas  Hmount  paid  by  stale)      .     .    .  594,089 

Enpenses  of  poor 210.739 

Police  depaitmenl 701,883 

Street  cleaning  dcparlraent l^3<934 

Fire  depaitmenl 214,226 

Stteet  lighling 111,303 

Parks,  cic. 51.080 

Salaries 71,624 

City  conndl 51.915 

For  expenses  other  than  those  or  city  government  there 
was  paid  out  ^3.862, 573;  of  which  ^96,704  was  in  pay- 
ment of  interest,  $1,310,000  in  payment  of  temporary  loans, 
^383,647  for  improvements,  and  $115,312  for  the  openiog 
and  paving  of  streets. 

The  assessed  valuation  of  real  estate  for  1S87  was 
#300,775,614;  of  personal  estate,  $64,784,338:  total, 
$365,559,952.  The  rate  of  the  city  levy  was  $1.60  OD 
the  $100. 

The  funded  debt  of  the  city,  December  31,  1887,  was 
$35,377,176,  the  greater  part  of  it  drawing  interest  at  5  and 
6  per  cent.  There  was  on  the  above  date  a  guaranteed 
debt,  i.e.  indorsement  of  railroad  mortgages,  amounting  to 
$993,000,  making  a  total  debt  of  $36,369,176.  For  the 
payment  of  the  annual  interest  on  $19,645,784  of  this 
amount  provision  has  been  made,  viz.  interest  received  on 
water,  ftark,  and  railroad  loans,  etc.,  and  there  remains  but 
$16,733,393  upon  which  interest  is  paid  by  taxation. 

TTic  productive  assets  of  the  city,  December  3r,  1887, 
including  the  sinking  fund  of  $6,039,241,  amounted  to 
$17,711,665,  and  the  unproductive  assets  to  $15,610,500, 


I 


REVENUES  AND  EXPENDITURES. 


The  following  statistics  are  for  the  fiscal  year  ending  April 
30,  1887.     For  this  period  the  total  receipts  for  the  city  of 
Boston  were  ^20,476,111,  the  expenditures  $18,562,518. 
The  principal  receipts  were  the  following  :  — 

TaiM M.*S5,88l 

Bulk  taxes 187/369 

Bank  taxes  collected  Cot  stale 6ao,(X>4 

Cotpoiation  taxes,  shore  fToiii  stale 648,215 

Taxes  un  foreign  ships,  shue  from  slate  ....  9>413 

Water-works,  tales,  elc 1,374^98 

Uquor  licenses,  fees,  etc 977-^7 

From  several  departmenfa,  including  income  from 

ttUEl  funds 699.490 

Interest  on  balances,  taxes,  etc Il6.3g4 

Pcdiers 775 

Loans 3.833.8oo 

Temporaiy  loan a,ooo,0O0 

Sinking  fund  foi  payment  of  debt 615,109 

The  ordinary  expenditures,  including  interest  on  the  city 
debt,  and  exchange  on  the  part  of  interest  (182,237,479), 
and  street  improvements  charged  to  general  appropriation, 
were  ^10,565, 983.  Of  the  remainder  the  principal  sums 
paid  out  were:  to  the  sinking  fund,  f 6 25, 005  ;  state  tax, 
$555,870;  sewerage,  $130,179;  special  street  improve- 
ments, $610.564 ;  parks,  $243,745  ;  additional  water  supply, 
$455,916;  $2,000,000  in  redemption  of  loan:  $600,753, 
stale's  proportion  of  bank  tax  ;  and  1149,979,  state's  pro- 
portion of  liquor  license  tax. 

The  total  assessed  value  of  real  property  for  i886  was 
1517,503,275  ;  of  personal  estate,  $193,1^8,060:  total  valu- 
ation, $710,611,335.  T^e  rate  of  taxation  was  $11.70  per 
fiooo. 


472  STATISTICAL   INFORMATION. 

The   total  funded  debt  of  the  city,  April  30,  1887, 
*45.966,963. 

There  was  at  the  same  date  in  the  sinking  fund,  f  19,946,811 
for  the  redemption  of  the  debt- 

Chieago. 
The  total  receipts  of  this  city  for  the  year  ending  Decern*  I 
ber  31,    1887,  were    ?i3,863,3oo;    the  total  eicpenditure^.l 
$13,220,320.    The  following  are  the  principal  receipts :  — 

T«ies >5,i66,isfi 

LiceDies 3,125,769 

Special  usnsmcnc,  paving,  etc ^664,534 

From  water  fund,  cenU,  etc 1,643,681 

From  school  fund,  rents,  dividcnib,  tax   ....     1,190,41119 

Rents 39,505 

Finet,  police  coarts 79><S6 

F"** 987  ^_ 

The  principal  objects  of  expenditure  were  :  —  ^^H 

Public  works  depailment 11,304,845  ^^^| 

Fire  department 826,048  ^^^ 

Health  department 279,788 

Police  department I,30S,s6a 

Schools,  buildings,  repairs,  etc. ^703.3'5  ^^_ 

Special  asKssmeuls,  paving,  etc 2,567,096  ^^H 

Stroet  lighting 543/H7  ^H 

Sewerage 34^,433  ^H 

Salaries 127,326  ^^H 

On  account  of  water  fond 1,804,104  ^^H 

The  cost  of  collection  of  taxes  was  ^58,145,  or  a  litd^^^J 

Lover  t  per  cent,  of  total  taxes  collected. 
The  total  equalized  valuation  of  real  estate  for  1887 
was    >i23,i69,455  ;    the    total    assessed   valuation  of  per-  , 

nnal  property  was  138,034,980 ;   total  equalized  raluatiaa  ^H 
$161,205,535.  ^H 


^M  REVENUES  AND   EXPENDITURES.  *73 

■        The  total  bonded  debt  of  the  city,  January  i,  1888,  was 
H     fii, 588,500,  the  greater  part  drawing  interest  at  7  percent. 

H  New  York. 

H  The  receipts  from  taxes  during  the  year  ending  December 

\       31,  1886,  were  *3i,568,097. 

The  receipts  into  the  treasury  on  account  of  the  general 
fimd  were  £1,966, 125,  chiefly  as  follows  ;  — 

Railroad  (ranchises M>S99 

Fee*  from  county  clerk 142,878 

Interest  on  tixea 609,128 

Licenjes,  manhal 43,130 

School  moneys  from  stale 589,311 

Depiitment  of  public  works 5ii734 

Department  uf  parks 17.0ZZ 

Department  of  public  chaiitiei 35>i85 

The  receipts  on  special  and  trust  accounts  were  jz,  1 28,03  7- 
The  following  were  the  most  important  items  :  — 

Excise  licenses $665,605 

Special  assessment,  locaJ  improvement  fund    .     .     .     453.gll 
Five  per  cent,  net  earnings  nf  Greenwich  St.  Elevated 

Railway ao.S^ 

Intestate  estates 15,873 

Theatrical  licenses 22,300 

Into  the  sinking  fund  for  the  redemption  of  the  city 
debt  there  was  811,978,385,  The  principal  items  were  the 
following  ;  — 

Market  rents  and  fee* (292.199 

Bonds  and  mortgage* 9517S7 

Licenses 65,607 

Dock  and  slip  rent        1,231,836 

Revenue  from  investments 1,731,113 

Interest  on  deposits 77>547 

k 


474  STATISTICAL   INFORMATION. 

Sale  of  real  ealale ^S.ioo 

Special  Bssessments        ..........  618,366 

Railroad  fianchises 95f9'l 

N.  Y.  &  Brooklyn  bridge  (siuplu*) V^V* 

Siup1u«  tevenncs  or  inlemt  fund 3,550^0 

InvcEimenis  paid  off 3.25o>950 

And  into  the  sinking  fund  for  the  payment  of  interest  C 
the  city  debt  there  was  received   Jz. 976, 648;   the  lar 
and  principa]  item  is  water  rent,  £2,485, 658 ;  interest,  fee 
fines,  etc.,  make  up  the  remainder. 

The  total  amount  received  for  account  of  the  city  treas 
(including  loans  of  {22, 607, 213,  and  a  few  more  items  i 
addition  to  those  mentioned  above)  was  ;S58,354,85i,  a 
for  account  of  sinking  funds,  £14,955,033,  making  the  I 
receipts  J73,309,884. 

The   payments   on   account   of    the   city   treasury  ■ 
£57,979,630  ;  on  account  of  the  sinking  funds,  £13,801,133; 
total  payments,  £71,780,743, 

The  purpose  of  payments  of  the  sinking  fiinds  is  evident ; 
the  principal  expenses  payable  liom  taxation  and  the  gen- 
eral funds  were :  for  state  taxes,  $4,199,606  ;  interest  on  debt, 
£7,245,205  ;  redemption  of  debt,  £857, 2r8  ;  department  of 
public  works,  £2,410,251;  public  parks,  £925,673;  public 
charities,  etc.,  £1,526,651  ;  police  department,  £3,942,322  ; 
street  cleaning,  £1,103,371;  fire  department,  £1,872.576; 
board  of  education,  £3,994,116;  asylums,  etc.,  £r, 148,834. 
On  the  special  and  trust  accounts  the  largest  payment  was 
revenue  bonds,  £16,070,600. 

The  assessed  valuation  of  real  estate  for  1886  was  £1,303,- 
941.065  i  of  personal  estate,  £217,027,221  ;  total,  Jr,42o,- 
968,286.  The  rate  of  taxation  of  real  and  personal  property 
was  2.29  per  cent.;  of  corporations  subject  to  local  tax, 
1.9945  per  cent, 

A 


REVENUES  AND  EXPENDITURES. 


47S 


The  total  funded  debt  of  the  city,  December  31,  1S86,  was 
f  125,981,736,  of  which  bonds  to  the  amount  of  ;£33,684,i90 
were  held  in  the  sinking  fund. 

The  amount  in  the  sinking  fund  on  the  above  date,  in- 
cluding the  above  city  bonds,  was  J41, 205,4 70. 


I^iladelphia. 

The  total  receipts  for  the  year  ending  December  31,  1887, 
were  t\  7,584,356 ;  the  total  disbursements,  %\  7.633.304. 

The  chief  sources  of  revenue  were  the  following :  — 

Tiuics  {currenl) Jlo,6o7.754 

T«M  (delinqMnt) 729.15* 

Poll  tan 30.086 

PuliHe  buiMing  tax 793 

Slale  (ax  (after  MtLllement) 12.579 

Highways SM58 

Water 1.99^1643 

Fines  and  penalties SWIO 

LJceiises  —  pawnbrokers,  etc 9.030 

Stale  appropriation  for  ichooU 189,156 

Cily  property 102,673 

Register  of  wills 101,568 

Bureau  of  gas 3,749.189 

Bureau  of  gas  (interest  account) 220,500 

City  solicitor ■fi7>6Sl 

The  expenditures  are  classified  as  follows:  — 

Interest  on  funded  debt »3,458,8ll 

Sinking  funds .  630,100 

Warrants  of  previous  years 460.473 

Erection  of  public  buildings 5^5.435 

Park  fund 5,786 

Mandamuses 35^5^5 

Loan 254,825 

Amount  paid  departments 11,961,349 

\ 


I 


476  STATISTICAL   II^FORMATrOff. 

Property  is  divided  into  three  classes,  according  as  it  pays 
full,  suburbaa,  or  farm  rate  ;  the  rates  being,  for  1886,  ji.85, 
Ji.ajJ,  and  Jo. 92^  respectively.  The  amount  of  propeny 
paying  full  rate  was  $569,587,035 ;  suburban  rate,  J4o,203,- 
885;  and  farm  rate,  Ji, 888,39a  :  total, {618,679,311.  Horses  , 
and  cattle  pay  full  rate ;  furniture  and  pleasure  carriages  full 
rate,  in  addition  to  the  state  tax ;  while  carriages  for  hire,  ' 
money  at  interest,  and  watches  pay  the  state  tax  only. 

The   funded   debt   of   the  city,  January   i,    1888.  wi 
(57,967,395,  being  ^9,500,921  less  than  January  i,  1883. 

The  city's  means  of  paying  debt  amount  to  139,717,834; 
?i, 125, 000  consisting  of  stock  in  the  Sunbury  and  Erie  Rail- 
road, the  remainder  of  sinking  fund  securities.     The  net  debt    | 
was  thus  $28,249,571. 

Atianla,   Georgia. 
Atlanta  is  taken  as  a  typical  Southern  city,  though  its 
budget  is  a  comparatively  small  one. 
The  following  receipts  are  given  for  1887 :  — 

Genera)  tax 4532,109 

Liquoi  license* 775            I 

Busineu  Ikeniei 4S.I91 

Drey  ftnd  hack  liccnica 5>937           I 

Cemetery  license 514 

Paving  and  curbing 34>3>8 

WBte(-work» 38,157 

Sale  gai  slock   ,.,... 95i^3 

Sale  bonds 25,000 

Recorders'  court  (fen) 151854 

Cainnii5<iiaD  sales,  etc .  5.306 

Misceltineoua  sources 5>57l 

Toml  receipts *797^75 

The  tax  collector's  office  shows  the  following  assessmeDts  J 
and  collections :  — 


REVENUES  AND   EXPENDITURES.  477 

Rett  estate,  returned  ....  £24,532,777      \\      1367,991 
RmI  estate,  not  reruined     .    .         400,3^7      ij  6,004 

Personalty 7.304.703      I  \        109.571 

Street  lax 11,001 

Slnilary  assessmest ,    .      14,683 

Total >SI0,Z5I 

It  will  be  noticed  that  the  liquor  license  tax  is  stnall.  The 
year  preceding  the  receipts  from  this  source  were  (37,708. 
A  high  license  has  again  been  placed  on  the  sale  of  liquor, 
and  the  city  will  receive  a  large  revenue  therefrom  during 
the  ensuing  year. 

The  expenditures  of  the  city  for  the  year  amounted  to 
1785,152,  the  principal  items  being  the  following:  — 

Salaries (24,015 

Public  buildings 5.647 

Sewers,  etc 23.823 

Paving  and  curbing .    66,065 

Streets  (ordinary) 48,396 

Public  schools 72,129 

Fire  department 45,^39 

Paupers  and  relier 12,067 

Street  lighting ■9,i77 

Police  department 52,865 

Sanitary  department 24,801 

Interest «S^357 

The  bonded  debt  of  Atlanta,  January  i,  1887,  was 
}  1,2  20,000. 


STATISTICAL   INFORMATION. 


hi 

.5.  . 


% 

Si's  8  ?  J  i 

ami 

% 

SaF£SC 

m 

ii 

lllf  P 

i 

t-' 

1! 

1    flli 

3   :  J|:»S 

i 

i 

...      ,a    . 

Illlil 

B   M   S   Z   £   < 

REVENUES  AND   EXPENDITURES.  479 

II  may  be  well  to  repeat  again  in  this  place  what  I  have 
several  times  said  in  regard  to  the  caution  with  which  tables 
like  the  following  should  be  used.  The  statistical  table  in 
regard  to  taxation  in  Baltimore  gives  a  glaring  instance  of 
the  faultiness  of  our  ordinary  financial  statistics.  The  valu- 
ation in  Baltimore  increased  in  1836  from  13,787,762  to 
£42,931,960.  Of  couree  this  is  due  to  a  new  assessment, 
and  the  decreased  valuation  in  1837  cannot  be  taken  as  an 
indication  of  a  real  depreciation  of  property.  It  is  probably 
due  to  complaints  on  account  of  over- valuation.  The  reader 
will  also  notice  that  the  fall  of  the  rate  of  taxation  to  66J 
cents  in  1836  from  ^4.77!  on  the  £100  of  assessed  valuation 
was  accompanied  by  a  real  increase  in  taxation,  because  the 
decrease  in  the  tax  rate  was  not  so  considerable  as  the  in- 
crease in  valuation.  This  is  an  unusual  case  of  difference 
between  the  real  and  the  nominal  rate  of  taxation,  but  it  is 
necessary  always  to  be  careful  in  tlie  use  of  tables  concern- 
ing taxation.  If  proper  care  is  exercised,  they  are  useful 
despite  their  imperfections.  I  repeat  these  cautions  in  so 
many  places,  because  tables  in  books  are  frequcnily  con- 
sulted by  those  who  have  perused  neither  what  follows  nor 
what  goes  before. 


STATISTICAL  INFORMATIOff. 


!   f 


?8        S 

H    \ 


1 

\ 


■i 

1 

III 
S-- 

.  :8,J'i5^««S-f.S 

m 

888888883888883 
»?  ^3  ;J  %^  ;j  1 -0 -? -c  0  t  <?  •? 

9 

V 

•s 
% 

S8888888888S888 

;""-"-"iiisswsi 

J 

S,      |,       y 

-i^          i     ;     -- 

<<<'  =  =  '  =  's.  =  |.  =  ^.. 
4      5^ 

II 

|N 

:  iHfSsiaass'jsRss 

s't^ 

3 

Htlllllffllltiiil 

1 

^M^^l 

1 

1 

■ 

jj^^^^^^^^^^B 

i 

REVENUES  AND   EXPENDITURES.               4S 

5*=,s:«=s sag's srjs-K?  ?  i  2   =   t  s 

8888888888 

88 

II 

t-. 

8888888888 
llllllllll 

S8S88 

Si 

\ 

8    8    8    8    8 

1    ?    E    1    ? 
K  j  §  1  a 
J  J  i  3  J 

l-r  =  .  =  --a=  =  =  -  =  |.  ..  =  =  =  , 

it      t      ^.  .  =  .  =  =  . 

!r!r!r3-!rs'ify:-:?:r2  22  2  2 

s-  y  :?  s,  8, 

s'j5«ffS.a-3=.?»=,KssJi 

1 

£2 

i'S.JssJSffjtyss.srs.s 

8 

•-'-III 

i 

a 

r 

n 

TATISTICAL   INFORMATION. 
^    S     :     &    J    ■S    5     5 

11   illllf 

1 

^1 

482 

1 

c 
1 

1 

I 

■ 

5 

J 

1 

1 

11 

1 

1 

1 

1 

mi 

«.  3.   .  *  ?  f  a  3 

II  ^ 1 1 !  s 1 

1  1     ^    J   1  5    ?    1 

1 

SI 

fl 

rf 

i 

if 

8    8    8    8    8    8    8    8 

«■   ^-    *   .S    o    ^   »•    - 

flif  IHI 

8 

1 

7 

8 
t 

1 

1 

A.  A.  1858. 
A.  A.  1866. 

II 

8    e  .  ?  ?  ^  ^  f 

f 

^ 

ii 

y8.8a  K5'2.«.?8  sa^s;  =il  ; 

iSjjl. 

3-  8  s   s,  a  ^  5  « 

£ 

J 

5315 1 

•* 

J 

J 

_■ 

_j 

i 

I 

^Bi^l 

■ 

1 

^^I^^^^H 

1 

1 
1 

■as 

1! 

f  H 

t    «,2 

J  Aye 

f  p 

EXPENDITUSES, 

«    SS.?   S.'S'S  ■S.s; 
t    £||  fit   «| 

"1 

483 
R 

% 

1 

1 

as. 

S.    3,S 
1     II 

3  1- 

iii 

Hi 

IP 

I  III  l| 

c£s^        Clip-'        oi°^         «^        ti'^        do^        aif^ 

888    83 

mil 

S    88 

fi 

8    68(8    88 

?  ill  m 

oiai         oio: 

8    88 

III 

8    88  8 

lilt 

< 

1    ■     ■ 

< 

??????? 

K          8,          S.          R           R          R          & 

1       1       1       1        s        i        f 

STATISTICAL   INFORMATION. 


, 

rs 

i 

i 

3tl|l 

Cb 

f 

n 

88 

p 

OS  a; 

8    88)8    83 

1  l|s  II 
1  m  P 

8     88 

1    P 

PS  a; 

8 
1 

% 

i 

■i 

1 
III 

JJ 

?■       ?       ?       ? 

ii 

S            J            8.           3 

£                   -                    -                    - 

111 

i 

a 

i 

1 

REVENUES  AND  EXPENDITURES.  48S 

Boston} 

Population  by  census  of  i860,  177,840.  Population  by 
United  States  census  of  1870,  including  municipalities  an- 
nexed, 250,256.  Population  by  state  census  of  1875, 
341,919.     United  Slates  census  of  1880,  362,839.    Slate 


census  0 

f  1885,  390,393. 

TSnOHU. 

TOTAt 

MTETUt 

•'"■"■ 

V*UJ*T10J..I 

1867'. 

(250,587,700 

«1 94.358.400 

(444,946.100 

(15.50 

iS6g    . 

287,635,800 

205.937.900 

493.573.^" 

12.30 

1869*. 

332,051,900 

2"7h»59.700 

549.511.600 

i3-7° 

1870    . 

365.593.100 

2.8.496.300 

584,089.400 

'5-30 

.87.     . 

39S.^'4.9S° 

217,448.600 

6t  2.663.550 

13.10 

1872    . 

443.^83,45° 

239.440.85° 

682.724,300 

11.70 

187J'  . 

470.086,200 

223,745,200 

693,831.400 

t2.8o 

1874    . 

554.200. 150 

244.554.900 

798,755.050 

.5.60 

>87S     ■ 

558.94  >. 000 

235,020,895 

793.961.895 

1370 

1876    . 

526,157,900 

222,838,310 

748,996,210 

12.70 

1S77     . 

481.407,200 

205.433.386 

686,840.586 

13.10 

.878    . 

440,375,900 

190.070,966 

630.446,866 

12.S0 

1879    . 

428.777.000 

184.545.692 

613,322,692 

12.50 

18S0    . 

437.370.100 

202,092,395 

639,462^95 

iS-ao 

18S1     . 

455,388,600 

210,165.997 

665.554,597 

13-90 

iSSa*  . 

467,704.150 

204,793.811 

672,497.962 

15.10 

r8g3    . 

478,3' 8.900 

204,113,771 

682.431.67T 

'4-5° 

1884    . 

488,130.600 

194.526,058 

682,656,658 

17.00 

.885    . 

495.973.400 

189.605.672 

685,579.072 

12.S0 

1S86    . 

517.503.275 

193,118,060 

710,621.33s 

IS.70 

L 


'  The  rolluwing  tables  concerning  Buston  are  taken  frum  Anditoi'i 
Report  for  Boston,  1886-87,  PP.  265-267;  — 

Includoi  in  Ihe  total  valuation  of  1S65,  nnd  (,11  lubsequenl  yeui, 

an  assessment  upon  corporation*  chartered  b»  the  Cummonweallh 

of  Masiachusclli,  fur  real  eilate  and  macbiner]'.     The  laal  itemii  taxed 


J 


REVENUES  AND  EXPENDITURES. 


487 


STATE 

KATS  PBS  $1 

/xw. 

VKAA. 

ITAV 

fkrV 

OTV    TAX. 

TOTAL  TAX. 

8TATB. 

COUNTY. 

CITY. 

1879 

$206,370 

1369,200 

$6,916,940 

$7,492,510 

$0.20 

$0.46 

$11.84 

t88o 

619,110 

260,000 

8,587,786 

9,466,896 

0.86 

0.27 

14.07 

1881 

619,110 

260,000 

8,173,282 

9,052,392 

0.81 

0.35 

12.84 

T883 

825480 

291,200 

8,798,073 

9.914,753 

1. 12 

0.29 

1369 

1883 

578.055 

291,200 

8,778,556 

9,647,811 

0.72 

0.28 

13.59 

18H4 

770.740 

301,600 

10,216,029 

11,288,369 

1. 00 

0.29 

15.71 

1885 

578*055 

301,600 

7,814.092 

8.693,747 

0.71 

0.27 

IX. 82 

1886 

555.870 

386.568 

7,897,240 

8,839,678 

0.65 

040 

1 1. 6s 

I 

p 


STATtSTrCAL   INFORMATION. 


AMOUNT  AND   RATE  OF  TAXAIKM. 


OT>  An. 

. 

AT<r»«i,o<». 

o.™n,TAX. 

" 

■"■ 

tgwimr. 

1867 

$1,694,150 

M.962.26. 

16,656,411        3 

<M 

i..S6 

tS63 

7*3-' 40 

5,161.689 

5,884,829        I 

S' 

10.79 

1869 

903.925 

6.375.399 

7.279.324        I 

7' 

"■■» 

1870 

933.77S 

7,703,087 

8.6j6,86a        1 

"•S 

13-65 

1871 

933.775 

6.856,669 

7.790,444        1 

57 

ir.53 

i«7» 

736-480 

7/>S3.362 

7.759-842        1 

•0.59 

«87.1 

828,540 

7.809,552 

8.638,092        1 

*3 

1B74 

802,110 

11,143.782 

11,045.902        1 

04 

14.56 

'87s 

8oi,iio 

9,7irpr6 

10,523.136        1 

04 

12.66 

1876 

742.932 

8,527,872 

9.170,804        I 

03 

11.68 

,877 

619.110 

8.135.104 

8,754.214        0 

91 

IJ.70 

1878 

4".740 

7^66,4<o 

7.879.150        0 

67 

12.13 

■s  peraonal,  >nd  a  Ihe  only  personal  utttc  luablc  by  loc*]  ■ 
[□  ■  MusachuKtIs  cor[iorBlioii. 

*  Oty  ot  Roxbury  united  with  BoEton.  with  valuation  of  real,  (iS,-  1 
365.4(Xi;  pecsonal,  (8,286.300  :  tolal,  $26,551,700.  , 

^  Town   of  Dorchester,   with  valuation   of  112.826,200   real,  and  I 
$7,489,500  penonat:    tola],  $20,315,700. 

'  City  of  CbatlcMoim,  and  Towns  of  WeM  Roxboiy  and  Brighton  :  ■ 


OuriMDWD     . 


.   |rf.o, 


,5.58. 


fj5,«««.68. 


•  In  conieijuence  of  Acl  1S81.  eiempting  money  loaned 
{■C  oF  leal  eitale,  the  personal  valuation  receded. 
Urge  gains  were  made  upon  the  other  items  of  penunal 


;eded,  notwitbitaiiding   ^^H 
enunal  estate,  ^^H 


REVENUES  AND   EXPENDITURES. 


"r 

=^ 

crrv,^. 

™*.,«. 

«^ 

«  J 

.PCO. 

.ta™. 

WfSt^. 

CT*. 

187^ 

SK.6.370 

*3&9.«» 

56,916,940 

(7^93.510 

J0.20 

JO.46 

*i..84 

■  880 

619,(10 

360,000 

8.587,786 

94M.S96 

0.86 

0 

27 

14/>7 

1881 

619.U0 

260,000 

8,173,282 

9.052.39= 

0.8. 

as 

12.84 

18S1 

815^80 

191,200 

B.798.073 

9.914.753 

29 

»,1.<'9 

1B81 

S78/'55 

391.100 

8.77S.55S 

9.647.81 " 

0.72 

0 

28 

1359 

iKK, 

770.740 

301,600 

,0,2.6,029 

11,388,369 

1.00 

29 

'5.7> 

.B8, 

578.055 

301,600 

7,814,092 

8.693.747 

0.71 

0 

»7 

11.82 

1886 

555,870 

386.568 

7.897,140 

8,839.678 

0.65 

o_40 

1..6S 

■ 

i88 

1 

STATISTICAL   INFORMATION. 

■ 

^\ 

SS'SS-SiBSWIS.S 

t 
1 

i 
1 

\ 

1 

■■■■■■■■■■■■  ^lllil 

% 

f!l||llllll|f 

!li 

! 

|::|i:|:|!||| 

1 

iiittiiiniii 

■ 

1 

M 

^^^■~ 

^ 

^^^^B^^l 

KE  VENUES 

4ND   EXPENDITURES. 

^H 

TlTTAl, 

^H 

vi*"-    '"""-'- 

TK,N. 

val'^™-. 

IHCUUL         j      TOTit  TAX. 

"'™'''^- '    ^1 

.850 

18,369 

J7.i2o,l49 

«S43.36S 
1.342,4^ 

>25.270  87 

f93.395          ^H 

■851 

8.562.717 

63.385  87 

|SS2 

48'^ 

10463^114 

1,900,697 

76.948  96 

'26.03s          ^H 

'83 

60.652 

16.841.831 

6.378.417 

135.662  68 

'89,6^^       H 

I854 

75.°°° 

14.392.239 

7.550.408 

499.081  64 

24S.666       ^H 

185s 

80,000 

*9.99-'.893 

3,600,654 

206.209  03 

328,000           ^^H 

r8s6 

»4."3 

3 '.736,084 

4.743. '9' 

396.652  39 

435.000         ^H 

:857 

36,J35.*8i 

4.599.197 

572.046  00 

535/>oo           ^H 

■858 

35.991.732 

36.S53.380 

430,190  00 

■859 

56V.648 

543,614  00 

iBto 

ia9,»6 

37.053.512 

500.132 

IgSI^ 

1861 

36,35  *.38o 

2,361.000 

(862 

1 38,  i  86 

37. '39.845 

787^65 

564,038  06 

1863 

43.667,324 

5.527.479 

S53.346  00 

3422.500 

1864 

'69,353 

48.73^.78* 

6^65.458 

974.665  64 

3,544.500 

186s 

17849* 

64.709.177 

15.976.395 

1.294,183  50 

3.701,000 

1866 

200^18 

85.95  3.»50 

21.244.073 

1,719,064  05 

4,369.500 

;a 

195.016,844 

109.073.594 

2.5.8.472  00 

4.757.500 

252,054 

230.247,000 

35.220,156 
35,777,880 

3,223,457  80 

6484.500 

iSfig 

266,024.880 

3.990.373  20 

7.882.500 

i«r> 

306.6^5 

275,986,550 

9.961.670 

4,139.798  70 

11,041,000 

18,. 

289,746^*70 

'3.759.920 

2.897464  70 

14,103,000 

ig,. 

367.396 

284.197,430 

4.362,961   45 

13.544.000 

I«73 

312.072,995 

27.875.S65 

S.6'7.3'3  9' 

13.478^00 

1874 

395408 

303,705.140 

5-466,693  54 

1J.456/X10 

.8,5 

•173.764,246 

5,108,981    40 

13457.000 

18,6 

407,661 

•168,037,178 

4.046.805  80 

13436,000 

1877 

•148,400,148 

4,013410  44 

13.364,000 

,8,S 

436.731 

■131,981436 

3.778.8^6  80 

13,057,000 

.879 

•117,970.135 

13,043,000 

1880 

503.298 

'ii7.'33.643 

12,752^00 

iSEl 

•119,151,951 

4.136,608  38 

13.752,000 

■  8S2 

56(^6^3 

•125.358.537 

4.227401  98 

11.752.000 

1883 

•<  33. 230,504 

4.540,506   13 
4,872,456  60 

12.751.500 

1SS4 

6l9'.985 

•137.326,980 

12.751.500 

1885 

•139.958.292 

S.1 53.366  03 

;?:» 

ISSO 

69ifi6i 

•158,496.132 

5.368409  76 

188, 

■161,204.535 

5,603.7.3  56 

(2.588.500 

* 

1 

■ 

■ 

190                     STATISTICAL  JNJ-0/iMATlOV. 

3 

1 

Cincinnati? 

m 

Population  by  census  of  i860,  161.044;  by 

1870,  218,900;  by  cen 

susof  1880,  255,208. 

f<»OK,lL 

Tcmu. 

«T««-I« 

"*"■ 

«*L    BI.™. 

KTATC 

PEii$i,g» 

1867  ,  . 

J5S.s69,040 

(68,412,285 

(.36.981.325 

(27^0 

tS6S 

69.799,604 

6l.583.9iS 

i3'.383.5^9 

28.00 

1869 

72,243.844 

5847 '.6«> 

»30.7'5.5'o 

3 '-90 

1870 

78.736481 

57.370.754 

136.107,236 

31.60 

.87. 

123427.888 

59.934.044 

180,361,932 

22.ao 

.8,1 

119,621,856 

55,462410 

175.084,166 

20.10 

1873 

111479.380 

64.166460 

185.645.740 

23^ 

18,4 

123,231,790 

58.718.284 

181,950,074 

^3-38 

.87! 

•25.976.835 

58.511,730 

.84498,565 

24-81 

1876 

i27,:43.9a> 

56,809,066 

183,951,966 

a7-at 

1877 

128,820,270 

50,609,872 

179*50,142 

29.10  ^^ 

1878 

129M3.8S0 

43.830,188 

172,874,068 

iS-st^^H 

1875 

128473.130 

40,83^.505 

169.303,635 

3S.gg^^| 

1880 

129,956,980 

37.578.376 

'67.535.356 

a'^n^^l 

1881 

120,045,230 

41.359.162 

161404.393 

3z.n^^H 

188a 

121,897.090 

45.089,015 

166,986,105 

33.8*^^1 

.883 

122,874,790 

47,050496 

169,925.286 

20.5q^^H 

.884 

124.625,370 

44.908,822 

169,534.19* 

15.56^^1 

,88s 

127,454,100 

42,632,868 

170,086,968 

16.86 

.886  .   . 

1a9.378.370 

42.571,661 

«7'«o.o3' 

"544 

1  T.Ma  «»MniiAE  CiDcmu 

uiulieDCrom  Audildi'i  Xcpoci,  Bosuw 

i 

STATISTICAL  INFORMATION. 


\ 


The  Qtv's  Taxes  and  ExrENSEs,  Past  and  Presbi 

The  great  advance  in  the  assessed  valuation  of  propertfl 
in  New  York  City  since  Tlu:  Record  and  Guide  fiist  saw  tbtil 
Light  is  a  matter  of  local  history.     It  is  interesting,  however,^ 
to  glance  at  the  figures  for   the  past  twenty  years  and  to 
institute  comparisons.     The  assessed  valuation  since  1868 
shows  an  increase  of  ?699,8z5,i34,  equal  to  77  per  cent. 
The  tax  levy  during  the  same  period  has  increased  about  34  J 
pet  cent.,  and  the  city's  running  expenses  over  3a  per  cenLl 
It  would  seem,  therefore,  that  these  have  not  kept  pace  wilhfl 
the  increase  in  population,  but  that  they  have  decreased  1 
the  inhabitants  became  more  numerous.     The  population  nu 
the  summer  of  1S68  was  about  875,000,  and  at  the  s 
time  of  the  year  in  1887  it  may  be  cstimaled  to  have  I 
about  1,575,000,  showing  an  increase  of  700,000,  or  80  p 
cent.     Had  the  expenditure  increased  in   the  same 
tion,   the   city's   expenses   would  have  been  ^48,0 
instead  of  about  134,000,000.     Again,  in  1868  the  appro- 
priation for  the  administration  of  the  city  government  was 
^29. 59  per  head,  while  in  1887  it  was  $22.71.    The  tax  levy 
during  the  same  period   has  increased  34  per  cent.,  or  46 
per  cent  less  than  the  advance  in  population.     A  curious 
matter  of  note  is  that  although   the   population  and  real 
estate  of  the  city  have  increased  so  largely  during  the  two 
decades,  the  assessed  valuation  of  property  per  capita  in 
1868   was    ?t037.S3,   while    in    18S7   it  was   but   $957.23.^ 
This  is  due,  of  course,  to  the  population   increasing  in  I 
slightly  greater  ratio  than  the  value  of  the  property.  lhou| 
it  will  be  observed  that  there  is  only  a  difference  of  JSo  | 

'  From  The  ReiorJ  and  Gtiidi,  of  New  York,  Much  34,  1S8& 


REVENUES  Al^D   EXPENDITURES.  493 

capita,  showing  that  the  value  of  property  has  advanced  in 
about  the  same  proportion  as  the  increase  in  population. 
The  following  are  the  figures :  — 


\ 


™. 

-v-r™-  i 

?l 

™....„.™.. 

— .T" 

iS68    . 

*J5,89S,6s9  02      2 

66 

*907.S'5.529 

824.147,893  02 

1869 

23,689.536  34      2 

27 

965,326,614 

21,912,91400 

.870 

23.07*.556  47     2 

25 

1/347.38S.449 

23,566.240  10 

18,1 

23.362.527  62     2 

'7 

1,076.253.633 

23.362.527  62 

■8;> 

34^36.290  51     2 

90 

1,104.074.537 

32/>36,29o  51 

■813 

30,154.187  77     » 

50 

i,i29,i39,6j3 

28.228,490  57 

■8« 

34.872,39'  79      2 

So 

1,1 54.029-' 76 

32,3ii,$i693 

I8,i 

36,17147223      2 

94 

1,100.943,699 

32,367,744  75 

1876 

34,934.801  26      2 

So 

1,111.054,343 

3. .109.52'  60 

18,7 

30,984.269  48     2 

65 

i,:or. 092,093 

29,178,94046 

1878 

30.079,077   13         2 

55 

1,098,3^7.775 

28,008,888  26 

187, 

30,247.750  20       2 

58 

1,094,069,33s 

28,226.988  84 

1880 

29,667,991    98         2 

53 

1,143.765.727 

28,937,27a  90 

1881 

31.759,205   14         2 

62 

1,185.948,099 

31,071,840  19 

t88z 

29434.03'   Jfi         » 

25 

'. 233.4  76.39S 

27,684427  26 

.883 

30.676.785  79      2 

29 

1,276.677,164 

29,(67,029  81 

1884 

34,067.585  51      2 

25 

'.338.298.343 

29,991,172  85 

.885 

34.678.405  41      I 

40 

'.37'. "7.003 

32,853,528  84 

1886 

33,802,320  59     2 

29 

1,420.968.386 

33,43 '.550  'S 

.S87    .    . 

34.343.oa2  55      2 

:!. 

1.507-640,663 

3J.370.696  78 

49f 

1 

STAT/ 

■ 

^1 

^TICAL   INFORMATION. 

a 

Pkiladdphia 

. 

s 

Population  by  census  of  t86o, 

S65.5"9;  by 

cnu^^^^H 

1870,  674,022  ;  by  census  of  1880, 

846,980. 

^1 

v^. 

«^  ^*T,.. 

™»™..  »..^. 

T„..V»....OX. 

4>st^ 

tS6S 

»44S.S63,3i7 

»7.954."69 

*4S3.S' 7.486 

>I4  00 

1S69 

454.19G.370 

7,862,257 

462,058,627 

iSoo 

.870 

471.600,265 

8.176,378 

479.776.643 

18  00 

.871 

491,844.096 

8,592.786 

500,436,882 

1800 

187! 

501.41  S-S'-J 

8.fe8,8.9 

511.014,682 

30   So 

1873 

5i8.i34.5"8 

8,930,700 

S27.i6s,2A8 

»    50     ^ 

1874 

539,003.601 

9.»  39.933 

548.*43.S3S 

2200  H 

'87s 

565.819,095 

9,464.873 

S75.*S3,968 

»SO   H 

.876 

585,408.705 

10,004,673 

595k»' 3.378 

2.  50  H 

1877 

S9J.3iJ.53» 

9.7S5.0O0 

603,068,532 

32    50     ^H 

1878 

577.S48.32B 

9.439.769 

586,988.097 

2.  50    H 

1879 

526.539.972 

8,069,892 

534,609.864 

3050      ^g 

18S0 

5Z9. 169,382 

7.498451 

536.667.834 

18S1 

535.805,744 

7.863,385 

543,669,129 

>9  S» 

1882 

545.^8.579 

8.166,650 

553.77S.m9 

18S3 

56^.687.555 

8,79S.7<» 

57MS3.155 

18  so      ^^ 

.884 

573.728,105 

9.884,57s 

583.612,683 

>8  5»    M 

.885 

587,749.82a 

10,035,600 

597.785428 

.8SO    ■ 

1886 

601,001,971 

10,307,644 

6n.309.6ts 

.850    H 

1887 

618,059,987 

10,619,325 

638,679,312 

.S.H 

■From 

Boiicm  Audiioi'i  Rrpoo,  1886-87. 

u«wd«i«m. 

..1  »,i,..d.j^| 

wu  place 

J 

J 

■ 

r 

3 

H^                       REVENUES  AND   EXi'ENDITUKES. 

m 

195 

^^^HV                             Providence} 

Population  by  census  of  iS6o,  50,665  ;  census 

of  1865, 

54,595  ;  census  of  1870.  68,904  ;  censu 

sof  1875. 

100,67s ; 

census  of  t88o,  104,850;  census  of  1885.  118,070 

■ATI  or 

■tta. 

IBT*™, 

""™*'' 

"'^"™- 

tOTALTAX. 

(■,«>>>■ 

.867 

*45/>27,IOO 

S4o,oi7,2oo 

(85.044,400 

«9. 8,480 

S1080 

1868" 

49,107,900 

43.6r8,ioo 

92,726,000 

1.112,712 

12   00 

1869 

50,909,800 

42.179.'"' 

93,088.900 

1.135.685 

12   20 

1870 

51,511,800 

40,565,100 

93.076,900 

'.^56,538 

13  5* 

187. 

64.995,800 

39,565,700 

104,561.500 

.,4l.,58o 

'3  so 

1872 

69,926,400 

40,160,700 

[10,087,100 

i486. 176 

'3  SO 

1873 

71.037,500 

41,443.900 

112,481,400 

1.5 '8,499 

'3  50 

1874' 

81,040,300 

41,641,500 

123,682,800 

1.793.401 

14  50 

187s 

82,862,900 

39.091,800 

12  ■,954,700 

■.768.343 

14  50 

1876 

84,981,000 

36,084.!OO 

121,065,200 

'.755.445 

14  so 

•877 

85.789.800 

32.085,000 

117.874,800 

1,709,185 

14  50 

.878 

86.341. 100 

30,699,400 

117,040.500 

1,697.087 

14  so 

1879 

86.8:6.100 

28,765,600 

.15,581,700 

1.618,144 

14  00 

1S80 

88,012.100 

27,908.900 

115,921,000 

'. 5*^.933 

13  50 

1881 

87.78S.000 

88,413.800 

116,201,800 

1.626,825 

14  00 

i88z 

88,987,900 

30,208,300 

119,196,200 

'.728.345 

'4  50 

1883 

90.143.40Q 

31,722,000 

121,865,400 

1,767.048 

14  50 

18S4 

9..64M00 

30.8  54.400 

122,496,500 

1. 776.1 99 

(4  50 

18B5 

92,887,400 

3[,3i4.6oQ 

124,202,000 

1.800.929 

14  50 

1886 

97.975.900 

32,281.500 

130,257,400 

1.823,604 

1400 

1  From  Bouon  Audiior'n  Rtpori,  ■ 

vu^. 

_J 

IV. 


RATES  OF  TAXATION.! 


I.  TABLE  SHOWING  RATE  OF  TAXATION  IN  CENTS  PER  |lOO,  IN  THE 

VARIOUS  STATES  FOR  1887.^ 


Alabama 55 

Arkansas 40 

California 56 

Colorado 55 

Connecticut I2| 

Delaware* — 

Florida 40 

(Georgia 35 

Illinois 35 

Indiana 12 

Iowa 25 

Kansas 41 

Kentucky 47J 

Louisiana 60 

Maine 27} 

Maryland 17} 

Massachusetts 8| 

Michigan 12| 

Minnesota 13 


Mississippi  .  .  . 
Missouri  .  .  . 
Nebraska  .  .  . 
Nevada  .... 
New  Hampshire  . 
New  Jersey  .  . 
New  York  .  .  . 
North  Carolina     . 

Ohio 

Oregon  .... 
Pennsylvania  .  . 
Rhode  Island  .  . 
South  Carolina  . 
Tennessee  .  .  . 
Texas  .... 
Vermont  .  .  . 
Virginia .... 
West  Virginia  .  . 
Wisconsin  .     .     . 


35 
40 

8ii 

90 

19 

25A 

27 

37l 

29 

31 

30 
12 

42l 

30 

37i 
10 

40 

35 
151 


^  llie  reader  should  not  attribute  too  much  significance  to  these  rates.  A  rate  of 
18  cents  on  the  $100  in  one  sute  may  be  really  a  higher  rate  of  taxation  Ihan  a 
rate  of  25  cents  in  another  state.  It  depends  upon  tlie  way  property  is  valued.  I 
have  no  doubt  that  our  Baltimore  rate  of  taxation  for  state  and  city  of  $a.o7|  is 
higher  than  $3.18  in  New  York  City,  because  the  Baltimore  assessed  valuation  is  so 
much  nearer  the  true  valuation. 

*  The  rate,  as  found  in  the  latest  report  received,  has  been  given,  in  most  instances 
for  1887.  If  the  above  are  not  consistent  with  the  preceding  detailed  statements,  it  is 
because  later  reports  have  been  found  regarding  this  point. 

'  There  is  no  state  tax  on  property. 


HATES  OF  TAXATION. 


497 


2,  SCHEDULE  SHOWING  THE  RATE  OF  STATE  TAX  ON  EACH  DOLLAR 
OF  THE  AGGREGATE  VALUATIONS  OF  PROPERTY  FROM  1816  TO  1 887, 
INCLUSIVE,  IN  THE  STATE  OF  NEW  YORK.^ 


MILLS 
1816   ....   2 

MILLS 
1850   ....    i 

MILLS 

1869  ....  5| 

1817   . 

.   2 

I85I    , 

.    i 

1870  . 

.  7iVj 

1818   . 

.  3 

1852   . 

•    i 

I87I  . 

.  SA'ir 

1819   . 

I 

1853   . 

I 

1872  .   . 

91 

1820   . 

,  I 

1854   . 

i 

1873  .   , 

6,^A 

I82I   . 

,  I 

1855   . 

•  »i 

1874  .   , 

.71 

1822   , 

.  I 

1856   . 

■  «i 

1875  • 

.  6 

1823   . 

.  I 

1857   . 

•  3 

1876  .   . 

.  3li 

1824   . 

.  I 

1858   . 

.  'i 

1877  .   . 

.  3i 

1825   . 

\ 

1859   . 

.   2i 

1878  .   . 

.  2A 

1826   . 

.   \ 

i860   . 

•  3i 

1879  .   . 

2ffAf 

1842   . 

.    I 

I86I    . 

■    3i 

1880  .   . 

.  3i 

1843   , 

.  I 

1862   . 

■  4| 

I88I  .   . 

2i 

1844   . 

.   lA 

1863 

1882  .   . 

.  2rt?a 

1845   « 

•     A 

1864 

•  St 

1883  •   • 

■3i 

1846   . 

.     A 

1865   , 

'  413 

1884  .   . 

.21* 

1847   . 

•     i 

1866   . 

•  SA 

1885  •   • 

2lWr 

1848   . 

i 

1867   . 

.  71 

1886  .   . 

'2^ 

1849   . 

i 

1868   . 

■  St 

1887  .   . 

2A 

>  From  Comptroller's  Report  for  1887. 


V. 


VALUATIONS  OP  REAL  AND  PERSONAL  PROPERTY. 

I.  TABLE 

Shewing  the  proportions  which  real  and  personal  property  Bear  to 
the  total  assessed  valuation  in  the  United  States  and  in  each  of 
the  geographical  sections?- 


RKAL    BSTATB. 

PKRSONAL 
PROPBRTY. 

ACCRBCATS. 

United  Scates    .    . 

7713 

22.87 

100 

New  England  States 

71.50 

28.50 

100 

Middle  States    .    . 

86.60 

13-40 

100 

Southern  States .    . 

70.77 

29.23 

100 

Western  States  .     . 

74.09 

25.91 

100 

Territories     .    .    . 

46.81 

53»9 

100 

^  Census  Report  for  x88o.    Volume  VII.i  patge  17. 


VALUATION  OF  PROPERTY. 


Shatoing  aueued  valualien  ff  real  atalt  and  ptrsenal  properly  ii 
the  yiars  iS6o,  iSjO,  iSSo,  tageOxer  with  p^reintagi  ef  iiuriai 
and  dttr tatty 


™. 

-"=:r- 

*"™".T"- 

s 

ii 

i 

ii 

i860 

18,0 

9.914,780.815 
13,036,766,925 

4.164,205,907 
3,S66,..6.6.8 

3' 

16 
9 

87 

n 

u  Repon  for  lUo.    VoIud 


S«)  STATISTICAL   INFORMATION. 


ir 


h 


~1  -*■  5  O    0>         O.00  !C(>"*-Q    W-H««M    »«    • 


CO  -J  trv  ^  -  o  a- 15  oo  sc  #  "^  -  ci  ft  Ks  O  «  r-  Ul 
n"  sO  ^  'f  P*  ^  q"  ^'4'  ■^OD  o"  tf  rf  lA  1^  ^  t^»  o  r^  S 
«  ««  r^f*!  "flft ''^w  N  2^<o  irtia  H^CT^as  *-  »«—  *^JK 


^  *  Q.^  "  **oQO  r^f^-i  lot^o  '^'^  ^om  *«—  — 
^•D  »iiB  f-i^  Q.  "t"  ■"  "t  "t  ■**  "  *  *"*  •n-  a:  ir. 


B_  p;~!aq  tt^-o  '?-t^  '?'€?  "  "i  ?  "t  ^5 


If|ils"i-s;3l?s4llt:r  1 


VALVATWtf  OF  PROPERTY. 


I 


II 11  pi  ■ill 

■2-  J«o-  Q  o-  a  «  ij  £  o'«  4«-  «.i  - 

HlffilpMliH 

jSljiilili 

1  %'Mn 

\  PiiX 

1  Pi  1^ 
*|i'jfl|  P 

J^l-:ii°  ;i 

lijii5i 


1 


I 


soz 


STATISTICAL   INFORMATION. 


In  some  states  the  valuation  of  railroad  property  is  given   I 
separately,  and  is  not  included  in  tlie  aliove  aggregate  valua- 
tion for  1887,     In  1880  the  railroad  property  seems  to  be 
included.     The  separate  valuations  of  railroad  proi>eny  are 
given  as  folio 


follov 

fS 

— 

^12,296.870 

Nebraska     .     . 

S23.60T,j6a 

'i7°4.''39 

Ne*  Hampshire 

'3.536.7'! 

22.981.927 

Nevada    .     .     . 

9.212^51 

62.972,101 

Nurth  Carolina 

7.o75.^S» 

38,712.761 

South  Carolina. 

16.263.82a 

3=^53.776 

Tennessee    .    . 

3«. 547.58a 

33.722.621 

Virginia  .     .     . 

35.7«'.5"S 

42.&17.264 

West  Virginia  . 

1*488.758 

In  order  to  determine  the  full  valuation  the  above  si 
must  be  added  to  the  totals  of  real  and  personal  property  as  J 
given  in  the  table.  In  states  where  railroad  properly  is  not  | 
given  separately  it  is  included  in  the  totals  of  real  and  pet^  I 
sonal  proper^. 


g 

1 

k^^^^^^* 

^ 

i^^^^^^^^^^i^^^i 

i 

f 

e 
1 
1 

i 

s 

8 
I 

■ 

i 

1 

VALUATION  OF  PROPER  TV.                       50 

i 

lllfillllliilill 

i 
1" 

1 

ililsiilfiiiisltiillil 

i 

lillliillli!iill 

i 
i 

1 

llllllltlllf  i  lilll 

■i 

IfllliyfaillMiSII! 

3 

1 

??  ffStJl  S|.R«  E8.S  S,J?iR=,  j|,| 

1 

1 

1 

2 

STATISTICAL  ISFORMATIOtf. 


Sl!,JKgElS,S8.'8,S8"! 


5,?K 


"O^qo,  5l^*  5(*  00  S  ac  £  K  5"! 


"*  n  ^3'S  Ss  K3S""-  oiRSS  ir£"6  JT- 
itf  i  -T  '^  "i  tf  »oo"so"  ■^00"  cS  <«"i  »  !h  ii«>co>a  "^ 
0>  5'  *o*o  o  **  "^  ro  10  *  u^  r^^  —  «  r^'O  r*  »o  »A  •*}  ** 


^H 

" 

* 

1 

1 

t 

8 
1 

t 

i 
I 

B 
S 
1; 

1 

i 
i 

1 

■ 

III 

» 

F 

J 
^ 

'/l/-l7.-tr/0.V  OF  /•/.•OPEfCTY.                        5C 

1 

J 

1 

l|ll|llll||S!IJ!!lllll 

¥ 

1 

5S 

eg 

J 

sIMIfpilplllilflli 

1 

1 

|illsl|sKls|3;|||jsj|j 

i 

* 

Is 

i 

> 

ii^ 

i 

iiiiiili! 

1 

^l^siKfiffS.'ffJSSisl^Js 

1 

STATfST/CAL   INFORMATION. 


i 

iiiiieiisiiiitiiiii 

lipnnHnninnn; 

i 

\ 

llSlllllpfilllliil 

mi 

ilillllHlifli  Efell 

11 

M 

3 

3 

M 

J 
i 

p  lis  llllf  1  isim-Sf  III 

M. 

iiPifiifiiiMSisiiii 

i 

im^is,srs^sTsm!U%.mu 

VALUATION  OF  PROPERTY 


5.    VALUATION   OF  PROPERTY   IN  CHARLESTON." 

The  assessed  valuation  of  real  estate  for  1886  was  216,933,- 
565;  of  personal  properly,  ^7,809,312;  total  of  real  and 
personal,  f  24, 74 2, 7 7 7. 

The  following  personal  property  was  retumeil  for  taxa- 
tion: — 

IJ43  hoTSci  and  mule* ^:zS,SS5 

331  neat  cattle 8,170 

I IZ7  gold  and  ulver  watches  and  plate ^4,482 

554  pianQ-fortes,  melodeaas,  and  cabinet  ocgani   .      48,950 

443  carriages,  buggies,  elc 40.190 

1136wagoni,  dtays,  carii,  etc 43-793 

774  "Jog* 7.740 

Merchandise,  moneys,  credits  pertaining  to  business 

□fincichsnts 1,183,337 

Materials,  machinery,  engines,  tools,  and  Bxlure*  of 

ininufacturers 907^086 

Moneys,  bonk  bills,  and  circulating  note*  on  hand  or 

deposit,  and  all  credits 451,516 

Slocks  and  bonds  of  companies,  corporations,  and 

persons  (exclusive   of  United  Stales,  stitc,  and 

city),  and  receipts  of  insurance  agencies      .     .     ■3,353,656 

Vessels,  boats,  and  other  flualing  properly      .    .    ,     201,618 

All  other  property,  including  household  furniture    .    451,790 

Total ^7.809,313 

'  From  Charleston  Vear  Book.  1886. 


508 

s  i 

E  1 

Hi 

o   1 

s  i 
5  1 

1 

MfSCElU.VEOUS 
'f  Doriucdios  icduiD 

■ 

:  :xx 

:  ;  :x :  :  :  ; 

1 

■ 

1 

-.•.«T.S."r™l,'2  ;:'^i; 

3 

:  :xx 

:  :XX  :  :  :  : 

i^..'"  (*J'Jl.d'ui^X>»)™ 

■    xx 

:  :1<  :  :  :  :  : 

:  :  :fe 

;  :1!^^^:  : 

1»™bS  e  IK  j|d<ud  *q  psy'lB  «1 

:  :X  : 

:  :  :X  :xxx 

3d.   Rl   «  J             UK.   oo.«T""' 

:  :x  :  :  :  :x 

■p.Bl  B  iq.p  XII 
]niin    pai»adai   sq   lou   Xeiu   uiun 

:  :xx 

:  :  :x  :xx  : 

IE  ijrqi  .I3nj«  .11  ■  Xq  piruoqinil 
iu|.i..  pji«iraoi  Ml  on  iqap  ON 

1 
O 

«om.«d  p«  .aidMiV^ 
-nti  'inq  «?  p>hh»i.  X[.:.u.i 

:  :xx 

:  :  :x  :xxx 

■«,^«™Xrfol 

XX  :  : 

:  :x  :>c  :  ;x 

HsiddiH  JO  DOBHoi  pdai  ox 

X  :xx 

;  ixxxxxx 

fp.  1(1 !«  'SuipawiJ  loo  uEo,  ^u 

HI 

^  #111 

• 

lilllN-Mi-.l 

IlilJIillilll 

DEBTS   OF  STATES  AXD   CITIES. 


tin  I 

is  III 


:x::x:::x:Xx;:;: 


"Is  ■ 


:x  ::;:,:  :  :xxx  : 


XXX  :xx  :  :xx  :xxxxxxx  :  :X  :xxx 


s'iij 
itiii 


MISCBLLANEOVS  MATTER. 


3.    ADDmONAL    CONSTITUTIDNAL   PROVISIONS  REGARDING  STATBJ 
AND   MUNICIPAL  DEBTS. 

Tempcrary  Z^ani. 

In  Alabama  no  new  loan  can  be  negotiated  until  the  oldf 
one  is  paid. 

A  law  authorizing  a  temporary  loan  must  provide  annus 
taxes  sufficient  to  pay  principal  and  inierest,:  in  Wisconsil 
in  live  years;  in  Minnesota  in  ten  years;  in  Kansas  wheii^ 
due  ;  in  Missouri  in  Iwo  years.  In  Nebraska  sufficient  taxes 
must  be  laid  to  pay  the  inierest.  Such  provisions,  excqjt 
in  Missouri,  are  declared  irrepcalable. 


w 


other  tiehls. 

In  addition  to  those  mentioned  in  the  table,  debts  may 
Colorado  and    Florida   be  contracted  (but  not  to  exceed) 
Jgo.ooo  in  Colorado)  for  the  erection  of  public  buildings 
and  also  in  the  latter  state  for  the  support  of  state  instill 
lions  or  the  completion  of  public  works ;  in  Kansas  del 
may  be  contracted  for  public  improvements,  but  not 
exceed  5i,oot 

In  Maine  the  constitution  authorizes  a  special  war  debt  of 
13,500,000.  In  Virginia,  Arkansas,  and  South  Carolina  there 
are  constitutional  provisions  forbitiding  the  issuing  of  in- 
terest-bearing treasury  warrants  or  scrip,  —  except 
ginia,  for  redemption  of  bonds  previously  issued,  and 
South  Carolina  and  Virginia,  for  such  debts  as  are  expressi] 
authorized  by  the 


Payment  of  debts. 

As  indicated  above,  provision  must  be  made  in  most  c 
e  states  for  payment  ol  debts  when  the  debt  is  contracte 


1 


DEBTS   OF  STATES  AND   CITIES. 


511 


It  is  further  obligatoiy  that  provision  shall  be  made  for  the 
payment  of  the  debt,  principal  and  interest :  when  due,  in 
Iowa,  Minnesota,  Kansas,  Nebraska;  or  within  thirteen 
years,  in  Maine,  Minnesota  and  Missouri ;  within  fifteen 
years,  in  Maryland,  Missouri,  and  Colorado  ;  within  eighteen 
years,  in  New  York  ;  within  twenty  years,  in  Iowa,  California, 
and  Nevada  ;  within  thirty  years,  in  Kentucky  ;  and  within 
thirty-five  years,  in  New  Jersey.  In  Illinois  and  North 
Carolina  and  South  Carolina  it  is  required  that  the  payment 
of  interest  when  due  shall  be  made. 


Limitation  of  Halt's  power  to  contract  debts;  Rebellion  debts. 
By  the  constitutions  of  Virginia,  North  Carolina,  Georgia, 
and  Mississippi,  the  state  shall  never  assume,  pay,  etc.,  any 
debt  incurred  in  aid  of  rebellion  against  the  United  States,  nor 
shall  any  tax  in  Virginia  or  North  Carolina  be  levied  for  the 
purpose  of  aiding  rebellion  against  the  state  or  the  United 
States;  and  in  Florida  all  debts  contracted  by  the  state 
or  its  municipahties  during  the  war,  except  for  school  pur- 
poses, are  void,  nor  shall  any  such  debt  ever  be  paid  in 
South  Carolina ;  and  it  is  further  required  in  the  latter  state 
that  all  debts  must  be  by  stale  bonds  not  under  {50  each, 
payable  in  twenty  years. 

Repudiation. 
The  constitutions  of  North  Carolina,  Missouri,  Mississippi, 
and  Arkansas  provide  for  the  repudiation  of  certain  debts. 


MUNICIPAL  DEirrs. 


Piirpi 

The  constitutions  of  sei 
restrictions  upon  municipali 


eral 


states  make  the  following 
etc.,  in  respect  to  liie  con- 


512 


MISCELLANEOUS  MATTER. 


1 


\ 


traction  of  debts :  No  country,  city,  or  village  shall  in 
New  York  contract  debts  except  for  county,  city,  and  vilbge 
purposes;  in  Colorado,  except  for  making  and  repairing 
public  roads  and  bridges,  and  for  erecting  public  buildings. 
In  Indiana  no  county  can  borrow  money  for  the  purchase  I 
of  stock  in  any  private  corporation. 

other  municipality  can  issue  interest-bearing  evidences  of 
indebtedness,  except  in  payment  of  debts  previously  {1874) 
existing  in  Kansas ;  in  Texas,  counties  or  cities  bordering 
on  the  Gulf  may  lev7  taxes  and  issue  loans  fur  the  erection 
of  sea-walls,  breakwaters  and  for  sanitary  purposes.  In  Col-  1 
orado,  school  districts  may  contract  a  loan  upon  majority  1 
vote  of  the  tax-payers  therein.  A  constitutional  provision 
concerning  counties  in  Maryland  has  already  been  noticed 
under  "  Loans  of  Credit." 

Amount. 

No  county  in  Oregon  shall  create  debts  to  exceed  {5000. 1 
Debts  in  excess  of  above    limitations  may  be  contracted  -1 
under   certain   circumstances :    in   Oregon,  lo   repel    inva- 
sion or  sujipress  insurrection ;    or   in    Indiana,  to    provide  | 
for  the  protection  of  the   people  in  time  of  war  or  great 
public  calamity,  on  the  petition  of  a  majority  of  the  property- 
owners  ;  or  in  Missouri,  to  erect  a  court  house  or  jail ;  or  in 
New  York  and  Colorado,  lo  supply  water  to  the  city  or   , 
town.      But   in   Colorado   counties   may    incur  debt    to  i 
greater  amount  than  as  above  limited  by  a  majority  vote  of  1 
the    tax-payers    in   such    county,  but   only  to  double  suchl 
amount. 

Payment. 

A  municipality  creating  a  debt,  must  at  the  same 
make  provision  for  the  payment  of  the  same,  princil>al 


DEBTS   OF  STATES  AND   CITIES. 


513 


interest,  either  by  a  tax  or  sinking  fund,  within  twenty  years 
in  Illinois,  Wisconsin,  Missouri,  California ;  within  fifteen 
years  in  Colorado  ;  within  thirty  years  in  Pennsylvajiia.  New 
York,  and  Georgia;  and  within  thirty-four  years  in  West 
Virginia.  In  Texas  the  sinking  fund  must  be  of  two  per 
cent,  annually. 


3- 

BONDED   DEBTIS 

OF  STATES 

AND  crriE! 

.' 

'^^^^'iS^ 

or  c.Ties. 

STAT». 

OMT. 

B«BT. 

ZH£. 

.S2Sl 

.sa,.' 

.8&>,' 

la&N 

iSSs. 

AUbamtt  .     .     . 

f  9. 193.900 

(9.008,000 

«3,492.50o 

»425,7oO 

Arkansas  . 

5.108,043 

2.813,500 

.78.694 

361.733 

CnWornin. 

2,698.000 

3,403.000 

7.055.' "5 

398,250 

Colorado  . 

□one 

J  6,000 

3+2.150 

Connecticut 

4.170,000 

4.967.600 

12.848,054 

1,581,100 

Oekware  . 

465,000 

880,750 

'-37M50 

44.100 

Florida     . 

1,175,000 

,,280.500 

106,497 

760,786 

Georgii    . 

8,733.5«> 

9.95 '.500 

8,917,800 

668,715 

Illinois      . 

none 

18.590.680 

2452,75* 

Indiana    . 

6,430,608 

4,998.178 

6.958,700 

1,871,419 

i4S.«5 

370435 

3.091-959 

584.303 

Kansas     . 

815.000 

1.181,975 

1.839.813 

955.709 

Kentucky . 

694.000 

1,858.008 

10.321,500 

783.3 '6 

I^ui=,i3n. 

11,982,621 

12,430,800 

yiHi-m 

96,000 

Maine  .    . 

3.959.000 

5,848,900 

12402450 

3.650.353 

Maryland . 

10,960,53s 

ii.277,[ii 

21.158.375 

43.575 

Massachujcll 

31,419.080 

33,020.464 

73.696.019 

3.091465 

Michiggii . 

»4 1-993 

905.' 50 

5.546.045 

837.356 

3.964.000 

2,565.000 

2.991.911 

686,387 

Mississippi 

3.751-904 

379485 

373,»'a 

94.246 

Missou.i   . 

10,517,000 

16,259,000 

15.666,449 

1.180,059 

449.rt7 

499.167 

4*8,535 

".146s 

Kevada     . 

54lfloo 

56.400 

tia.000 

aeywo 

1 


MISCEIJ^NEOVS  MATTER. 


I 


s  OF  STATES  AND  cmES.  —  Continued. 


1 


^.NDEI,  DIBTS 

«»Di<r.uBn 

„.™. 

fS" 

BOHlUn 

™  Ifjl  J^^ 

#?3" 

1BS7. 

.880. 

i«e». 

leso. 

New  Hnmpihire 

(2,912,600 

»3,5oi,ioo 

(2,952,400 

(■.663.759 

Ne*J«scy   .     . 

1,496,300 

1,896.300 

38.648,850 

2.795.654 

New  York     .    . 

7,444,310 

8,988.360 

208.536,882 

2,ia4.ioa 

North  Cfolioa  . 

13.' 79,04s 

5,006,616 

697.900 

248,656 

Ohio    .... 

3.845.2^ 

6.476.805 

40.683,526 

1.926,28s 

OreBon     .    .    . 

110,000 

356,508 

76,5°° 

lO/JOO 

Fenniylvania 

15,692.600 

21,561,990 

9Sh145.*J4 

2.804,012 

Rhode  Island     . 

l,34l/»o 

2,534.500 

11,4*4.750 

South  Caro1in>  . 

6,122,928 

6,639,171 

5.380,301 

124.25s 

Tennessee     .    . 

11,412.900 

20,991,700 

4,433,400 

353.834 

Texa.   .... 

4.137.73° 

5.566.928 

3.I4I.662 

261,731 

Vermonl    .     .     . 

none 

4,000 

607.900 

2,606.963 

Virginia    .    .     . 

29.095.967 

*9.345.»*6 

10,707,177 

866.666 

Wcsl  Virginia    . 

none 

506,500 

394.  <oo 

■Wisconsin     .    . 

2,252,000 

11,000 

3,683,651 

3.343.583 

Total  uf  Stales 

2.6,879,095 

246,835,027 

681,616,460 

4'.MS.*S9 

I 


incmbercd  thai  iIk  dcbu  of  biHb 
IU1  equil  ihc  detx.  ud 


productive  piopenj  oi 


oT  Ibe  soBiuuI  debt,  wxt 
»t  lundi  And  the  tike,  own  stale  aDcl  cily  biHld*.     Jdvj, 
tctjcall).  owe  iKMhinE,  alilwugb  ibqr  lUuid  in  the  reporu 

'     R|iDrud  Ihut  Tuu  huaurplu  oTlhiH 


ertjiiif  Ballimon  City,  .     . 

tbe  debt.     The  cily  <wni  ■p.ix  (hi 

{vMeraMii'™lB^^ 

peitdiliirei  already  clveii  ihnuld  be 

Ihne  in  ihe  dewilt"' 

Ihui  thoee  b(  mlii 


^g^SSSS. 


I 


INHERITANCE   AND   BEQUESTS. 

COMMENTS  ON  PROPOSED  CHANGE  '  IN  THE  STATUTES  OF 
DESCENT  AND  WILLS  IN  ILLINOIS,  SO  AS  TO  INSURE  A 
MORE      GENERAL     DIVISION     OF     PROPERTY     AMONG     THE 

PEOPLE. 

AT  the  meeting  of  the  Illinois  State  Bar  Association  Jan- 
uary, 1886,  the  committee  on  law  reform  recommended, 
among  other  things,  a  most  important  change  in  the  statutes 
of  descent  and  wills,  which  we  think  ought  to  receive  pro- 
found consideration.    The  recommendation  is  as  follows  :  — 

"  Thai  the  statutes  of  descent  of  property  and  of  wills  be 
so  changed  as  to  limit  the  amount  that  any  one  may  take  by 
descent  from  the  same  pereon  or  by  betjuest  or  devise,  ex- 
cept for  educational  and  other  charitable  purposes." 

The  committee  proceed  to  say  that  they  would  not  recom- 
mend such  a  limitation  as  would  carry  the  estate  away  from 
the  kin  of  the  decedent,  or  that  would  change  the  law  as  to 
the  great  majority  of  estates,  but  they  would  apply  the  limi- 
tation to  those  "  abnormally  large  fortunes  "  which  by  being 
kept  together  as  they  may  be  as  the  law  now  stands  "  menace 
the  political  power  of  the  state," 

The  exact  way  in  which  such  estates  should  be  divided  — 
that  is,  among  whom  as  heirs  and  in  what  proportions  is  not 
set  forth.  The  committee  seem  to  have  thought  it  better  to 
leave  the  details  to  the  wisdom  of  the  legislature.     They  do, 


ft 


516  AtJSCELLANEOUS  MATTER. 

however,  by  way  of  example,  tell  us  where  tiie  limitation 
might  begin,  and  how  it  could  be  applied.  They  say  that  the 
amount  a  child  might  inherit  might  be  limited  to  $500,000  ; 
those  standing  in  the  next  degree  of  kinship  Sioo.ooo;  if 
there  is  more  than  enough  to  satisfy  those  in  that  degree  the 
overplus  to  go  to  the  next,  with  a  like  limitation,  and  so  on 
until  the  estate  is  exhausted. 

Suppose  the  estate  to  amount  to  f  1,000,000  i.nd  that  the  1 
decedent  lefi  one  child,  and  brothers  and  sisters  and  other 
kinsmen;  the  child  would  take  {500,000,  and  the  remaining 
2500,000  would  go,  first  to  the  brothers  and  sisters,  Dot  ex- 
ceeding ?ioo,ooo  to  each,  and  if  there  remained  a  balance,  1 
that  would  go  to  those  standing  in  the  next  degree  of  kin- 
ship to  the  decedent,  with  a  like  limitation,  and  so  on  until 
the  whole  estate  is  exhausted.    If  there  are  no  heirs,  or  after  ] 
paying  olT  all  who  are  entitled  to  share  in  the  estate  there  I 
still  rL'mains  a  balance,  this  may  go  to  the  state,  or  under  the  1 
law  as  it  now  stands,  in  case  there  are  no  heiis  capable  of  I 
taking  the  estate  of  an  intestate. 

The  committee  disavow  any  intention  of  a  departure  froai  j 
the  settled  policy  of  the  law  of  this  country  upon  the  subject  ] 
in  hand  ;  on  the  contrary,  they  insist  that  their  "  recommen- 
dation is  in  harmony  with  the  spirit  of  our  institutions,  and  in  1 
the  sitme  direction  as  the  present  laws  against  perpetuities,  1 
entailments,  and  of  descent." 

That  they  are  not  agrarian  or  communistic  in  their  syra-  | 
pathies  is  shown  by  the  liberality  of  their  limitation.  Those  J 
estates  which  fall  short  of  the  limitation  would  not 
affected.  Half  a  million  dollars  ought  to  be  a  reasonably  I 
satisfactory  fortune  for  a  young  man  or  young  woman  to  I 
begin  with,  and  the  other  poor  kinsmen  would  lind  life  not  ■] 
unreasonably  burdensome  to  whose  store  a  hundred  thoU'  1 
sand  dollars  should  be  added  by  way  of  windfall.     It  is  not  | 


INHERITANCES  AND   BEQUESTS.  517 

unlikely  that  the  most  serious  apprehension  which  will  be 
excited  by  the  proposed  reform  will  be,  that  if  the  legisla- 
ture once  enters  upon  the  policy  of  limiting  the  amount  one 
may  take  by  descent  or  will,  ihat  it  will  run  lo  extremes. 
In  our  estimation,  however,  this  fear  is  substantially  ground- 
:.  The  conservative  force  of  property  itself  will  be  amply 
sufficient  to  meet  this  danger.  The  greater  danger  is  that 
the  influence  of  property  interest  is  so  great  as  to  render 
any*reform  in  the  direction  suggested  out  of  the  question, 
except  through  the  means  of  revolution. 

The  report  does  not  enter  into  an  extended  argument  in 
support  of  the  recommendation,  but  one  of  the  points  made 
is,  that  while  the  laws  as  they  now  stand  were  sufficient,  in 
the  days  of  slow  accumulations,  to  counteract  the  tendency 
nass  the  wealth  of  the  country  in  few  hands,  that  times 
have  changed,  and  lliey  no  more  have  that  effect.  The 
report  adds :  — 

"  There  never  was  a  time  in  the  history  of  the  world  when 
the  ])ower  of  money  in  skilful  hands  was  so  great  as  the 
present ;  or  when  the  use  of  that  power  was  made  so  con- 
I  spicuous.  I'he  new  forces  at  its  command  are  augmenting 
w  it  with  wonderful  rapidity.  Already  the  sceptre  has  ))assed 
from  the  sword  to  the  counting-house.  'I'he  fact  that  one 
individual  may  monopolize  hundreds  of  millions  tif  the 
wealth  of  the  nation  and  pass  it  at  last  by  will  lo  another, 
with  all  its  possibilities,  is  a  growing  source  of  uneasiness 
among  all  classes  of  society. 

•'  It  cannot  be  denied  that  in  the  proportion  that  the  very 
rich  are  increased,  so  is  the  number  of  the  very  poor  also 
increased,  and  the  number  of  those  comfortably  off  de- 
creased." 
,.  After  some  discussion  by  members  of  the  Bar  Association 

■     present  at  the   meeting,  the  subject  was  referred  back  to 


518 


MISCELLANEOUS  MATTER. 


,  members  of  ^^H 
with    request  ^^^| 

"""""  »  ■ 

lore  fully  their  ^^| 


Messrs.  H.  B.  Hurd  and  James  A.  Connolly,  members 
the  coramillee  making  the  recommendation, 
that  they  report  at  the  annual  meeting  of  the 
be  held  at  Springfield,  January,  1887.  giving  more  fully 
reasons  in  support  of  the  measure,  and  if  they  think  proper, 
presenting  a  draft  of  a  bill  in  accordance  with  the  recom- 
mendation. 

We  shall  look  with  interest  for  this  report  and  the  treal- 
ment  it  will  receive  at  the  hands  of  the  members  ofatjie 
association.     LaNvyers  are  proverbially  conservative,  and  it 
is  not  a  little  encouraging  that  so  advanced  a  measure  has  1 
been  brought  forward  by  ihem.' 

At   a   meeting  of  the   Bar  Association  of  the  State    1 
Illinois,  in   January,    1887,   Messrs.    Harvey   B.   Hurd   and  ] 
James  A.  Connolly  made  a  report  on  the  laws  governing  in- 
heritance and  bequests.      From    the   abstract,  as  given  in  1 
Jacobson's  "  Higher  Ground,"  the  following  quotation  is  ] 

"  As  to  whether  the  disposition    of  property  upon  the  1 
death  of  the  owner  was  wilhin  the  control  of  the  legislative  ] 
power  of  the  state,  it  should  be  said  thai  there  never  was  | 
a  time  in  the  history  of  the  law  when  such  disjxtsition  was  I 
not  regulated  by  the  state.     No  state,  as  far  as  known,  had 
seen  fit  to  impose  any  constitutional  restriction  upon  the 
exercise  of  this  power.     Both  in  England  and  in  this  coun- 
try the  power  to  dispose  of  property  by  will  was  the  creature 
of  the  statute.     The  statutes  of  wills  of  the  different  states 
were  almost  as  variant  as  the  statutes  of  descent.     There 
was  no   constitutional   restriction   upon   the    right   of  the 
legislature  to  make  and  change  such  laws  to  suit  the  wishes  i 
of  the  people,  nor  was  there  any  vested  right  standii^  ia  J 
the  way." 

'  Rtpr-nl  from  t'iUoro  /,aru  Timei 


INHERITANCES  AND  BEQUESTS. 


In  the  legislature  of  Illinois,  session  of  1887,  the  follow- 
ing, among  other  proceedings,  were  had :  — 

HOUSE   FILL,   NO.    333. 

35lh  Assembly,  I Uinoi*. —January,  1887. 

Introduced  by  Mr.  Collins's  special  committee,  January 
28,  1S87. 

Fir^t  reading  January  j8,  1S87,  ordered  printed  and  re- 
ferred to  Coramillee  on  Judiciary. 

The  Special  Committee,  to  whom  was  referred  the  prepa- 
ration of  a  bill  to  restrict  the  amount  any  person  or  corpo- 
ration may  take  by  descent  or  will  from  the  same  decedent, 
respectfully  report  the  following  bill :  — 

W.  H.  Collins,  Chairman. 

A  Bill  for  an  Act  to  restrict  the  Amount  any  Person  or 
Corporation  may  take  by  Descent  or  Will  from  the  same 
DecedenL 

Section  1.  Be  it  enacted  6y  Ike  People  of  the  Stale  of  lUimis 
represented  by  the  General  Assembly,  No  person  shall,  by  will 
or  testament,  devise  or  bequeath,  either  in  trust  or  other- 
wise, more  in  value  or  amount,  to  the  same  person,  than  as 
follows,  lo  wit  r  To  his  or  her  surviving  wife  or  husband,  not 
more  than  the  sum  or  value  of  five  hundred  thousand  dol- 
lars, or  if  the  estate  of  decedent  is  in  whole  or  in  part  in 
land,  not  more  than  fifteen  hundred  acres  of  land ;  to  a 
child  of  the  testator,  or  of  his  or  her  wife  or  husband,  or  a 
legally  adopted  child,  not  more  than  the  sum  of  five  hun- 


520 


MISCELLANEOUS  MATTER. 


\ 

I 
I 


dred  thousand  dollars,  or  if  the  estate  or  decedent  v. 

whole  or  in  part  in  land,  not  more  than  lifteen  hundred  I 

acres  of  land ;  to  the  descendants  of  a  child,  in  case  of  ihe  1 

death  of  the  child,  not  more  than  by  this  section  might  be  l 

given  to  the  child  if  she  or  he  were  living ;  to  any  other  1 

person  or  corporation,  not  more  than  the  sura  or  value  of  I 

one  hundred  thousand  dollare ;  and  any  devise  or  bequest  I 

shall  be  valid  to  such  amount  or  value,  and  no  more.    This  1 

section  shall  not  apply  to  devises  or  bequests  for  educadonal  I 
or  benevolent  purposes. 

Sect.  2.    No  person  shall  he  capable  of  taking  by  descent  1 
or  distribution  either  of  the  real  or  personal  estate  of  any  ] 
person  who  shall  die  after  the  taking  effect  of  this  act,  more 
in  vajue  and  amount,  as  follows,  to  wit :  A  surviving  hus- 
band, or  wife,  or  child,  or  a  descendant  of  a  child  when  he 
can  take  directly  and  not  by  representation,  not  to  exceed 
five  hundred  thousand  dollars,  or  if  estate  of  decedent  is  in  J 
whole  or  in  part  land,  not  more  than  fifteen  hundred  acres  | 
of  land.     The  descendants  of  a  child  taking  by  representa- 
tion may  take  the  same  as  the  person  he  or  she  represents  1 
might  have  taken  if  he  or  she  were  living.     No  other  person  I 
entitled  to  take  by  descent  or  distribution  shall  be  capable  I 
of  taking  from  the  same  decedent  more  than  one  hundred  1 
thousand  dollars.     When  the  estate  is  more  than  sufficient  J 
to  give  to  the  persons  first  entitled  to  take  the  full  amount  | 
to  which  they  arc  limited  by  this  act,  the  balance,  or  s 
much  thereof  as  may  be  sufficient  to  give  to  each  of  them  I 
the  amount  they  may  take  under  the  limitations  contained  I 
in  this  act,  shall  go  to  the  kin  of  the  deceased   standing  I 
next  in  kinship  after  those  first  entitled  to  take  under  the  1 
laws  of  descent  in  their  degree  and  their   representatives.  \ 
If  there  is  more  than  sufficient  to  give  to  each  of  those  I 
standing  in  that  degree  of  kinship  and  entitled  to  take  the  \ 


I 


I.VIfEX/TAXCES  A\D  BEQUESTS.  521 

■mount  he  or  she  may  take  under  this  act,  the  balance,  or 
ch  thereof  as  may  be  sufficient  to  give  to  each  of 
those  the  amount  he  or  she  may  take  under  the  hmitations 
of  this  act,  shall  go  to  those  standing  in  the  next  succeed- 
ing degree  of  kinship  to  tlie  deceased  and  their  represen- 
tatives. The  like  rule  shall  be  applied  to  any  surplus,  so 
long  as  there  shall  be  any,  until  the  whole  estate  is  divided 
among  the  kindred  of  the  deceased,  preferring  those  stand- 
ing nearest  to  the  deceased,  to  the  extent  he  or  she  may 
take  under  the  hmitations  of  this  act.  When  there  is  not 
sufficient  to  give  each  of  the  persons  standing  in  a  certain 
degree  of  kinship  and  entitled  to  share  the  full  amount 
he  or  she  might  lake,  such  part  of  the  estate  shall  be 
divided  among  them  and  those  entitled  to  lake  by  repre- 
sentation in  equal  shares,  according  to  the  rules  of  descent 
heretofore  existing.  If  any  balance  remains  after  every 
person  capable  of  taking  the  same  shall  have  taken  the 
amount  or  value  he  or  she  is  entitled  to  take,  the  same 
shall  escheat  to  the  slate,  as  in  cases  where  there  is  no 
person  capable  of  inheriting  the  estate.  If  in  any  case 
,  person  shall  be  entitled  to  take  both  by  descent  and 
by  will  from  the  same  decedent,  the  aggregate  in  value  or 
amount  he  or  she  may  take  shall  not  exceed  the  amount 
he  or  she  is  capable  of  taking  by  one  of  these  ways. 

Sect,  3.  The  inventory  required  by  law  to  be  made  by 
an  executor  or  administrator,  in  addition  to  the  matters  now 
required  to  be  stated  therein,  shall  also  state  the  value  of 
each  piece  or  parcel  of  real  estate  of  which  the  deceased 
died  possessed  of  or  was  in  any  way  entitled,  and  the  total 
value  of  the  whole  estate,  real  and  personal ;  whicli  state- 
ment of  the  total  value  of  said  estate  shall  be  conclusive 
upon  all  persons  who  shall  claim  any  interest  in  such  estate 
by  descent  or  under  the  will  of  the  deceased,  by  virtue  of 


52Z 


MISCELLANEOUS  MATTER. 


this  act,  unless  the  san 
Upon  a  sworn  petition 
the  estate  as  heirs  or 
value  is  too  low  or  toi 
disinterested  persons  t 


,e  is  changed  as  hereinafter  provided. 
of  one  or  more  persons  interested  in 
distril)iilors,  showing  that  such  total 
I  high,  the  court  shall  appoint  three 
>  revalue  the  estate,  who,  being  first 
sworn  to  make  a  just  and  tnie  valuation  thereof,  shall  re- 
value the  same  and  make  return  of  iheir  valuation,  which, 
unless  set  aside  for  fraud  or  mistake,  shall  be  conclusive 
as  to  the  rights  of  all  persons  claiming  or  to  claim  anf 
interest  in  said  estate  by  descent  or  under  the  will  of  the 
deceased.  In  all  cases  where  a  specific  article  or  piece  of. 
real  or  personal  properly  is  given  or  devised  by  will,  the 
value  thereof  may  be  inquired  into  in  such  way  as  the  Pro- 
bate Court  shall  direct. 

Sect.  4.  In  the  proof  of  heirship  it  shall  not  be  necessary 
to  show  other  than  the  heirs  who  will  be  entitled  to  sharK 
in  the  estate,  taking  into  account  the  limitations  contained 
in  this  act.  Only  such  heirs  or  distributees  as  shall  appear 
to  be  entitled  to  share  in  the  estate  need  be  notified  of  the 
final  settlement  by  the  executor  or  administrator. 

Sect.  5.  Before  the  final  settlement  of  the  estate,  or  with 
a  view  to  making  such  settlement,  the  court  shall  find  the 
total  value  of  the  estate,  and  who  are  the  heirs  or  persons 
interested  therein  as  heirs,  legatees,  devisees,  or  distributees, 
and  the  nature  and  amount  of  their  respective  interests,  and 
may  order  the  whole  or  any  part  of  the  real  or  personal 
estate,  or  both,  to  be  sold,  and  the  proceeds  brought  into 
court  for  distribution  according  to  the  rights  of  the  parties, 
or  may  declare  the  rights  and  interests  of  the  respective 
parties  in  the  respective  pieces  and  parcels  of  real  estate, 
and  may  make  any  and  all  orders  that  may  be  necessary  to 
carry  into  effect  the  provisions  of  this  act. 
Sect.  6.   Every  gift,  conveyance,  transfer,  or  disposition 


I 


INHERITANCES  AND  BEQUESTS. 


of  any  real  or  pergonal  estate  made  with  intention  to  defeat 
the  operation  of  this  act  shall  be  void. 

Sect.  7.   All  acts  or  pans  of  acts  inconsistent  with    the 
provisions  of  this  act  are  hereby  repealed.' 


3.      HEW    VORK    LAWS    REGARDING    COLLATtlRAL    INHERTTANCES 
AND    BEQUESTS. 

An  Act  to  amend  chapter  four  hundred  and  eighty-three  of 
the  laws  of  eighteen  hundred  and  eighty-five,  entitled 
"An  act  to  tax  gifts,  legacies  .and  collateral  inheritances 

in  certain  cases," 

Passed  June  35. 1887;  ihree-liftliB  being  presenL 

The  people  of  the  Stale  of  New  York  represented  in  Senate 
ami  Assembly,  do  enact  asfoliewt :  - 

Section  1 .  Chapter  four  hundred  and  eiglily-three  of  the  laws 
of  eighteen  hundred  and  eighiy-live,  entitled  "An  act  to  tax  gifts, 
legacies  and  collateral  inheritances  in  certain  cases,"  is  hereby 
amended  so  as  lo  read  as  follows :  — 

S  I.  After  the  passage  of  this  act  all  property  which  shall 
pass  by  will  or  by  the  intestate  laws  of  this  state,  from  any  per- 
son who  may  die  seized  or  po.ssessed  of  the  same  while  a  resident 
of  thb  slate,  or  if  such  decedent  was  not  a  resident  of  this  state 
at  the  time  of  death,  which  property,  or  any  part  thereof,  shall 
be  within  this  state,  or  any  interest  therein,  or  income  tlierefrom 
which  shall  be  transferred  by  deed,  grant,  sale  or  gift,  made  or 
intended  to  take  etfecl  in  possession  or  enjoyment  after  the  death 
of  the  grantor  or  bargainor,  lo  any  person  or  persons,  or  to  any 
body  politic  or  corporate,  in  trust  or  otherwise,  or  by  reason 
whereof  any  person  or  body  politic  or  corporate  shall  become 
beneficially  entided  in  possession  or  expectancy,  to  any  property 
or  to  die  income  thereof,  other  than  to  or  for  the  use  of  his  or 

>  This  is  also  quolc]  fiom  Jacobion's  ■■  lliehei  Ctoun.l." 


524 


MISCELLANEOUS  MATTER. 


,  the  nife      ^^1 


her  father,  mother,  husband,  wife,  child,  brother,  abler, 
or  widow  of  a  son,  or  the  husband  of  a  daughter,  or  any  child  oi 
children  adopted  as  sucli  in  conformity  with  the  laws  of  the  stale 
o(  New  York,  or  any  person  to  wliom  the  deceased  for  not  l<^s 
than  ten  years  prior  to  his  or  her  death  stood  in  the  mutually 
acknowledged  relation  of  a  parent,  and  any  lineal  descendant  of 
such  decedent  born  in  lawful  wedlock,  or  the  societies,  corpora- 
tions and  institutions  now  exempted  by  law  from  taxation  by 
reason  whereof  any  such  person  or  corporation  shall  become 
benelicL-dly  entitled,  in  possession  or  expectancy,  to  any  such 
properly  or  to  the  income  thereof,  shall  be  and  is  subject  lo  a 
tax  of  live  dollars  on  every  hundred  dollars  of  the  clear  market 
value  of  such  property,  and  at  and  after  the  same  rale  for  any 
less  amount,  to  be  paid  to  the  treasurer  of  the  proper  county,  and 
in  the  city  and  county  of  New  York  to  the  comptroller  thereof, 
for  the  tise  of  the  state,  and  all  administrators,  executors  and 
trustees  shall  be  ILible  for  any  and  all  such  taxes  until  the  same 
shall  have  been  paid  as  hereinafter  directed,  provided  that  an 
estate  which  may  be  valued  at  a  less  sum  than  five  hundred  dol- 
lars shall  not  be  subject  to  such  duty  or  tax. 

5  2.  When  any  granl,  gift,  legacy  or  succession  upon  which  a 
tax  is  imposed  by  section  first  of  this  act,  shall  be  an  estate,  in- 
come or  interest  for  a  term  of  years  or  for  life,  or  determinable 
upon  any  future  or  contingent  event,  or  shall  be  a  remainder, 
reversion  or  other  expectancy,  real  or  personal,  the  entire  prop- 
erty or  fund  by  which  such  estate,  income  or  interest  is  sup- 
ported, or  of  which  it  is  a  part,  shall  be  appraised  immediately 
after  the  death  of  tlie  decedent,  at  whal  was  the  fair  and  clear. 
markot  value  thereof  at  the  time  of  the  dealh  of  the  decedent,  in' 
the  manner  hereinafter  provided,  and  the  surrogate  shall  there-' 
upon  assess  and  determine  the  value  of  the  estate, 
interest  subject  to  said  tax,  in  the  manner  recorded  in  section 
thirteen  of  this  act,  and  the  tax  prescribed  by  this  act  shall  b» 
immediately  due  and  payable  to  the  trea.surer  of  the  proiieri 
county,  and  in  the  city  or  county  of  New  York  lo  the  compliol- 
ler  thereof,  and,  together  with  the  interest  thereon,  shall  bt 
remain  a  lien  on  said  property  until  the  same  is  paid ;  pravidedlj 


I 
■ 


INHERITAfTCBS  AI^D  BEQUESTS. 


S25 


that  the  person  or  persons,  or  body  politic  or  coqjorate  bene- 
ficially interested  in  the  property  chargeable  with  ssid  tax,  may 
elect  not  to  pay  the  same  until  they  shall  come  into  the  actual 
possession  or  enjoyment  of  such  property,  and  in  that  case  such 
person  or  persons  or  body  politic  or  corporate,  shall  give  a  bond, 
to  the  people  of  the  state  of  New  York,  in  a  penalty  of  three 
times  the  amount  of  the  tax  arising  upon  personal  estate,  with 
such  sureties  as  the  surrogate  of  the  proper  county  may  approve 
conditioned  for  the  payment  of  said  tax  and  interest  thereon  at 
such  time  or  period  as  they  or  their  representatives  may  come 
into  the  actual  possession  or  enjoyment  of  such  property,  which 
bond  shall  be  tiled  in  the  ofiice  of  the  surrogate  of  the  proper 
county ;  provided  further,  that  such  person  shall  make  a  full 
verified  relivn  of  such  properly  to  said  surrogate,  and  file  the 
same  in  his  office  within  one  year  from  the  death  of  the  decedent, 
and  within  that  period  enter  into  such  security  and  renew  the 
same  ever}-  five  years. 

{  3.  Whenever  a  decedent  appoints  or  names  one  or  more 
executors  or  trustees  and  makes  a  bequest  or  devise  of  property 
to  them  in  lieu  of  their  commissions  or  allowances,  which  other- 
wise would  be  liable  to  said  tax,  or  appoints  them  his  residuary 
legatees,  and  said  bequest,  devises  or  residuary  legacies  exceed 
what  would  be  a  reasonable  compensation  for  their  services,  such 
excess  shall  be  liable  to  said  lax,  and  the  surrogate's  court  haV' 
ing  jurisdiction  in  the  case  shall  fix  such  compensation. 

S  4.  All  taxes  imposed  by  this  act  unless  otherwise  herein 
provided  for,  shall  be  due  and  payable  at  the  death  of  the  dece- 
dent, and  if  the  same  are  paid  within  eighteen  months,  no  interest 
shall  be  charged  and  collected  thereon,  but  if  not  so  paid,  interest 
at  the  rate  of  ten  per  cent,  per  annum  shall  be  charged  and  col- 
lected from  the  lime  said  tax  accrued ;  provided,  that  if  said  tax 
is  paid  within  six  months  from  the  accnring  thereof,  a  discount 
of  five  per  cent,  shall  be  allowed  and  deducted  from  said  tax,  and 
in  all  cases  where  the  executors,  admiiiislrulors  or  trustees  do 
not  pay  such  tax  within  eighleen  months  from  the  death  of  the 
1,  they  shall  be  required  to  give  a  bond  in  the  form  and 


526 


MISCELLj4i\'£OrS  MATTER. 


:l  for  the  pajTnel 


lo  the  effecl  prescribed  in  section  two 
of  said  tax,  together  with  interest. 

%  5-  The  penalty  of  ten  per  cent,  per  annum  imposed  by 
tion  four  hertof,  for  the  non-payment  of  said  tax,  shall  no 
charged  where  in  cases  by  reason  of  claims  made  upon  the 
estate,  necessary  litigation  or  other  unavoidable  cause  of  dflay. 
the  estate  of  any  decedent,  or  a  part  thereof,  cannot  be  settled 
at  the  end  of  eighteen  months  from  the  death  of  the  decedent, 
and  in  such  cases  only  six  per  cent,  per  annum  shall  be  charged 
upon  the  said  tax,  from  the  expiration  of  said  eighteen  months 
until  the  cause  of  such  delay  is  removed. 

S  6.    Any  administrator,  executor  or  trustee  having  in 
or  trust,  any  legacy  or  properly  for  aistribution,  subjec 
said  tax,  shall  deduct  the  tax  therefrom,  or  if  the  legacy 
erty  be  not  money,  he  shall  collect  the  tax  thereon  upon  the 
appraised  value  thereof  from  the  legatee  or  person  entitled  to 
such  property,  and  he  shall  not  deliver,  or  be  compelled  to  de- 
liver, any  specific  legacy  or  jiroj>erty  subject  to  tax  lo  any  person 
until  he  shall  have  collected  the  tax  thereon ;  and  whenever 
such  legacy  shall  be  charged  upon  or  payable  out  of  real  est 
the  heir  or  devisee  before  paying  the  same,  shall  deduct  said 
therefrom,  and  pay  the  same  to  the  executor,  administrator 
trustee,  and  the  same  shall  remain  a  charge  on  such  real 
until  |iaid.  and  the  payment  thereof  shall  be  enforced  by  tl 
executor,  administrator  or  trustee  in  the  same  manner  thai 
payment  of  such  legacy  might  be  enforced ;    if,  however, 
legacy  be  given  in  money  to  any  person  for  a  limited  period, 
shall  retain  the  tax  upon  the  whole  amount,  but  if  it  be  not 
money,  he  shall  make  application  to  the  court  having  jurisd! 
of  his  accounts,  lo  make  an  apportionment,  if  the  case  require  il 
of  the  sum  to  be  paid  into  his  hands  by  such  legatees,  and 
such  fiirthcr  order  relative  thereto  as  the  case  may  require. 

\  7-  All  executors,  administrators,  and  trustees  shall  have  fiiU 
power  lo  sell  so  much  of  the  property  of  the  decedent  as  will 
enable  ihem  to  pay  said  tax,  in  the  same  manner  as  they  may  be 
enabled  by  taw  to  do  for  the  payment  of  debt,  of  their  testatoi 


charg«,^^| 
to  tb^^l 


may  ae  | 

«statais^^M 


INHERITANCES  AND  BEQUESTS. 


SZ7 


I 


and  intestates,  and  the  amount  of  said  tax  shall  be  paid  as  here- 
inaiter  dkccted. 

\  8.  Every  sum  of  money  retained  by  an  executor,  administra- 
tor or  trustee,  or  paid  into  his  hands,  for  any  lax  on  any  property, 
shall  be  paid  by  him  within  ihirly  d.tys  thereafter,  to  the  treasure!- 
of  the  proper  county,  or  in  the  city  and  county  of  New  York,  to 
the  comptroller  thereof,  and  the  s,iid  treasurer  or  comptroller  shall 
give,  and  every  executor,  administrator,  or  tru^jtee  shall  take 
duplicate  receipts  from  him  of  such  payment,  one  of  which 
receipts  he  shall  immediately  send  to  the  comptroller  of  the 
slate,  whose  duty  it  shall  b«  to  charge  the  treasurer  or  comp- 
troller so  receiving  the  tax,  with  the  amount  thereof,  and  shall 
seal  said  receipt  with  the  seal  of  hLs  office,  and  countersign  the 
same  and  return  it  to  the  executor,  administrator  or  trustee, 
whereupon  it  shall  be  a  proper  voucher  in  the  setdemcnt  of  his 
accounts,  but  an  executor,  administrator  or  Inistee  shall  not  be 
entitled  to  credits  in  his  accounts,  nor  be  discliarged  from  lia- 
bility for  such  tax,  unless  he  shall  produce  a  receipt  so  sealed 
and  countersigned  by  the  comptroller,  or  a  copy  thereof  certified 
by  him. 

§  9.  Whenever  any  of  the  real  estate  of  which  any  decedent 
may  die  seized  shall  pass  to  any  body  politic  or  corporate,  or  to 
any  person  or  persons  other  than  his  or  her  fiither,  mother,  hus- 
band, wife,  lawful  issue,  brother,  sister,  wife  or  widow  of  a  son, 
or  husband  of  a  daughter,  or  child  or  children  adopted  by  such 
decedent  according  to  law,  or  any  person  to  whom  the  deceased 
for  not  less  than  ten  years  prior  to  his  or  her  death,  stood  in  the 
mutually  acknowledged  relation  of  a  parent,  or  in  trust  for  them, 
or  some  of  them,  it  shall  be  the  duty  of  the  executors,  adminis- 
trators or  trustees  of  such  decedent,  to  give  information  thcrcol 
riting  to  the  treasurer  or  comptroller  of  the  county  where 
such  real  estate  is  situate,  within  six  months  after  they  undcrtalce 
tion  of  their  respective  duties,  or  if  the  fact  be  not  known 
to  them  within  that  period,  then  within  one  month  after  the  same 
shall  have  come  to  their  knowledge. 

Whenever  any  debts  shall  be  proven  against  the  estate 
of  a  decedent,  after  the  payment  of  legacies  or  distribution  of 


^^rt 


S2S  AflSCELLA.VEOUS  MATTER. 

property  from  which  the  said  nx  has  been  deducted,  or  u 

which  it  has  been  paid,  and  a  refund  is  made  by  the  legatee, 
devisee,  heir  or  next  of  kin,  a  proportion  of  the  tax  so  paid  shall 
be  repaid  to  him  by  the  executor,  administrator  or  trustee,  if  the 
said  tax  has  not  been  paid  to  the  county  treasurer,  comptroller, 
or  to  the  stale  treasurer,  or  by  them  if  it  lias  been  so  paid. 

511.  Whenever  any  foreign  executor  or  administrator  shall  | 
assign  or  transfer  any  stocks  or  loans  in  this  state,  standing  in 
the  name  of  a  decedent,  or  in  trust  for  a  decedent,  which  shall  be 
liable  to  the  said  tax,  such  tax  shall  be  paid  to  the  treasurer  or 
comptroller  of  tlie  proper  county  on  the  transfer  thereof,  other- 
wise the  corporation  permitting  such  transfer  shall  become  liable 
to  pay  such  tax.  provided  that  such  corporation  hail  knowledge 
before  such  transfer  that  said  stocks  or  loans  are  liable  to  said 
tax. 

$  12.  When  any  amount  of  said  lax  shall  have  been  paid  erro- 
neously to  the  state  treasurer,  it  shall  be  lawful  for  him,  on  s; 
factory  proof  rendered  to  the  comptroller  by  said  county  treasurer 
or  comptroller,  of  such  erroneous  payment,  lo  reAmd  and  pay  to 
the  executor,  administrator,  person  or  persons  who  have  paid  any 
such  lax  in  error,  the  amount  of  such  lax  so  paid,  provided  that 
all  sucli  applications  for  the  payment  of  such  lax  shall  be  tnadc  , 
within  five  years  from  the  dale  of  such  payment. 

5  13.    In  order  to  fix  the  value  of  property  of  persons  whose  1 
estates  shall  be  subject  to  the  payment  of  smd  lax,  ihc  surrogate, 
on  the  application  of  any  interested  party,  or  upon  his  ownmotioD, 
shall  appoint  some  comiictcnt  [icrson  n.s  appraiser  as  often  as,  and 
whenever  occasion  may  require,  whose  duty  it  shall  be  forthwith 
to  give  such  notice  by  mail  to  all  persons  known  lo  have  or  claim  - 
an  interest  in  such  property,  and  to  such  persons  as  tlie  surrogate 
may  by  order  direct,  of  the  time  and  place  he  will  appraise  such  ^ 
property ;  and,  at  such  dmc  and  place,  to  appraise  the  same  a 
its  &ir  market  value,  and  make  a  report  thereof  in  writing  to  said  J 
siuTogate,  together  with  such  other  facts  in  relation  thereto  aft  I 
said  surrogate  may  by  order  require,  to  be  filed  in  the  office  of  "I 
such  surrogate ;  and  from  this  report  ilie  said  surrogate  shall  ' 
'  irthwith  assess  and  fix  the  then  cash  value  of  all  estates,  annul- 


I 


INHERITANCES  AND  BEQUESTS.  529 

ties,  and  life  estates  or  terms  of  years  growing  out  of  said  estate, 
and  the  tax  to  which  the  same  is  liable,  and  shall  immediately 
give  notice  thereof  by  mail  lo  all  parties  known  lo  be  interested 
therein,  and  the  value  of  every  future  or  contingent  or  limited 
estate,  income  or  interest  shall,  for  the  purposes  of  this  act,  be 
determined  by  the  rule,  method  and  standards  of  mortality  and  of 
value,  which  are  employed  by  ihc  superintendent  of  the  insurance 
department  in  ascertaining  the  value  of  policies  of  life  insurance 
and  annuities,  for  the  determination  of  the  liabilities  of  life  insur- 
ance companies,  save  that  the  ra.Ie  of  interest  to  be  assessed  in 
computing  the  present  value  of  all  fiiture  interests  and  contingen- 
cies shall  be  tive  per  cent,  per  annum ;  and  the  superintendent  of 
the  insurance  department  sliall,  on  the  application  of  any  surro- 
gate, determine  the  v^Uuc  of  such  future  or  contingent  or  limited 
estate,  income  or  interest,  upon  the  lacts  contained  in  such 
report,  and  certify  the  same  to  tlie  surrogate,  and  his  certificate 
shall  be  conclusive  evidence  that  the  method  of  computations 
adopted  therein  is  correct.  Any  person  or  persons  dissalislied 
with  apptai»emeni  or  assessment  may  appeal  tlierefrom  to  the 
surrogate  of  the  proper  county  within  sixty  days  after  the  making 
and  tiling  of  such  assessment,  on  panng  or  giving  security  ap- 
proved by  Ihe  surrogate  to  pay  all  cosU,  together  with  whatever 
tax  shall  be  fixed  by  said  court.  The  said  appraiser  shall  be 
paid  by  the  county  treasurer  or  comptroller  out  of  any  funds  he 
may  have  io  hi:<  bands  on  account  of  said  tax,  on  the  certificate 
of  the  surrogate,  at  the  rale  of  three  dollars  per  day  for  every  day 
actually  and  necessarily  employed  in  s,-iid  appraisement,  together 
with  his  actual  and  necessary  travelling  cx{ienscs. 

%  14.  Any  appraUcr  appointed  by  virtue  of  this  act  who  shall 
take  any  fee  or  reward  from  any  executor,  administrator,  trustee. 
legatee,  next  of  kin  or  heir  of  any  decedent,  or  from  any  other 
person  liable  to  pay  said  tax,  or  any  portion  thereof,  shall  be 
guilty  of  a  misdemeanor,  and  upon  convicdon  in  any  court  hav- 
ing jurisdiction  of  misdemeanors,  he  shall  be  fined  not  less  than 
two  hundred  and  fifty  dollars  nor  more  than  five  hundred  dollars, 
and  imprisoned  not  exceeding  nintydays.  and  in  addition  thereto 
the  surrogate  shall  dismiss  him  from  such  service. 


SJO 


M!SCEU-.iNF.OUS  MATTER. 


1 


5  15.   The  surrogate's  court  iu  the  county  in  which  the  real 
property  is  situate  of  a  decedent  who  was  not  a  resident  of  the 
stale,  or  in  the  county  of  which  ihe  decedent  was  a  resident  at 
tile  lime  of  liis  death,  shall  have  jurisdiction  to  hear  a^nd  de-    . 
lermine  all  questions  in  relation  lo  the  tax  arising  under  the  j 
provisions  of  this  act,  and  the  surrogate  first  acquiring  jurisdic-  I 
tion  hereunder  shall  retain  the  same  to  the  exclusion  of  every  I 

\  16.    If  it  shall  appear  to  the  surrogate's  court  that  any  tax  J 
accruing  under  Ihia  act  has  not  been  paid  according  ti 
shall  issue  a  cilation.  citing  the  persons  interested  in  the  prop-  | 
crty  liable  to  the  tax  10  appear  before  the  court  on  a  day  c 
not  more  than  three  months  after  the  date  of  such  citario 
show   cause  why  said   tax  should   not  be  paid.     The  ser 
such  citation  and  the  time,  manner  and  proof  thereof,  and  fees  I 
therefor,  and  the  hearing  and   determination   thereon,  and  the  1 
enforcement  of  ihe  determination  or  decree  shall  conform  t 
provisions  of  the  Code  of  Civil  Procedure,  for  the  service  of  cjta-  9 
tions  now  issuing  out  of  surrogates'  courts,  and  the  hearing  and  1 
determination  thereon  and  its  enforcement.     And  the  surrogate, 
or  clerk  of  the  surrogate's  court,  shall,  upon  the  request  of  the  1 
district-attorney,  tre.isurer  of  the  county,  or  comptroller  of  the  I 
county  of  New  York,  furnish,  without  fee,  1 
.scripts  of  such  decree  as  provided  in  section  twenty-five  hundred   i 
and  (ifty-three  of  the  Code  of  Civil   Procedure,  and   the  sam< 
shall  be  docketed  and  filed  by  the  county  clerk  of  any  county  ii 
the  slate  without  fee,  in  the  same  manner,  and  with  llie  same  | 
effect  as  provided  by  said  section  for  tiling  and  docketing  t 
scripts  of  decree.s  of  such  courts. 

5  17.  Whenever  the  treasurer  or  comptroller  of  any  cotuity  J 
shall  have  reason  to  believe  that  any  tax  is  due  and  unpaid  under  1 
this  act,  after  the  refusal  or  neglect  of  the  persons  interested  i 
the  property  liable  to  said  tax,  to  pay  the  same,  he  shall  notify 
the  district  attorney  of  the  proper  county,  in  wriling,  of  such 
failurr  lo  pay  such  lax,  and  the  district  attorney  so  notified,  if  be  , 
have  proLible  cause  10  believe  a  t.ix  is  due  and  unpaid,  ihafl  J 
prosecute  the  proceeding  in  the  surrogate's  court  in  Ihe  propef'l 


!NHERITANCES  AND   BEQUESTS. 


531 


county,  as  provided  in  section  sixteen  of  ihia  act  for  tile  enibrce- 
t  and  collection  of  such  tax.  All  costs  awarded  by  such 
decree,  that  may  be  collected  after  the  collection  and  payment  of 
the  tax,  lo  the  treasurer  or  comptroller  of  the  proper  county,  may 
be  retained  by  the  district  attorney,  hereafter  elected  or  ap- 
pointed, for  his  own  use. 

%  18.  The  surrogate  and  county  clerk  of  each  county  shall. 
every  three  months,  make  a  statement  in  writing  to  the  county 
treasurer  or  comptroller  of  his  county  of  the  property  from  which, 
or  the  party  from  which,  he  has  reason  to  believe  a  lax  under  this 
act  is  due  and  un[)aid. 

{  19.  Whenever  the  surrogate  of  any  county  sliaii  certify  that 
there  was  probable  cause  for  issuing  a  citation  and  taking  the 
proceedings  specified  in  section  seventeen  of  this  act,  the  state 
treasurer  shall  pay  or  allow  to  the  treasurer  or  comptroller  of 
any  county  all  expenses  incurred  for  services  of  citation  and 
his  other  lawfiil  disbursements  that  have  not  otherwise  been 
paid. 

\  20.  The  comptroller  of  the  state  shall  lumish  to  each  surro- 
gate a  book  in  which  he  shall  enter  the  returns  made  by  ap- 
praisers, the  cash  value  of  annuities,  life  estates  and  terms  of 
years  and  other  property  fixed  by  him,  and  the  tax  assessed 
thereon,  and  the  amounts  of  any  receipts  for  payments  thereon 
filed  with  him,  which  books  sliall  be  kept  in  the  office  of  the 
surrogate  as  a  public  record. 

I  2t.  The  treasurer  of  each  county  and  the  comptroller  of  the 
county  of  New  York  shall  collect  and  pay  the  stale  treasurer  all 
taxes  that  may  be  due  and  payable  under  this  act,  who  shall  give 
him  a  receipt  therefor,  of  which  collection  and  payment  he  shall 
make  a  report  under  oath  to  the  comptroller  on  the  first  Monday 
in  March  and  September  of  each  year,  stating  for  what  estate 
paid,  and  in  such  form  and  containing  such  particulars  as  the 
comptroller  may  prescribe ;  and  for  all  such  taxes  collected  by 
him  and  not  paid  to  the  stale  treasurer  by  the  fir^t  day  of  Octo- 
ber and  April  of  each  year  he  shall  pay  interest  at  the  rate  of  ten 
peri 


t.  per  annum. 
%  22.   The  treasurer  of  each  c 


y  and  the  comptroller  of  ihs 


532 


MISCELL.-INEOUS  MATTER. 


city  and  county  of  New  York,  shall  be  allowed  to  reUin.  on  all 
taxes  paid  and  accounted  for  by  him  each  year,  under  this  act, 
in  addition  to  his  salan'  or  fees  now  allowed  by  law,  five  per 
cent,  on  the  tirst  fifty  thousand  dollars  so  paid  and  at:t:aurited  for 
by  him,  three  per  cent,  on  the  next  fifty  thousand  dollars  so  paid 
and  accounted  for  by  him,  and  one  per  cent,  on  all  additional 
sums  so  paid  and  accounted  for  by  hira. 

\  33.  Any  person  or  body  politic  or  corporate  shall,  upon 
paj-ment  of  the  sum  of  fifty  cents,  be  entitled  to  a  receipt  fi^jm 
the  coun  ty  treasurer  of  any  county  or  comptroller  of  the  county  of 
New  York,  or  a  topy  of  the  receipt,  at  his  option,  that  may  have 
been  ^ven  by  said  treasurer  or  comptroller  for  Ilie  paj-nient  of 
any  tax  under  this  act,  to  be  sealed  with  the  seal  of  his  office, 
which  receipt  shall  designate  00  what  real  property,  if  any,  of 
which  any  decedent  may  have  died  seized,  said  tax  has  been 
paid,  and  by  whom  paid,  and  whether  or  not  it  is  in  full  of  said 
tai,  and  said  receipt  may  be  recorded  in  the  clerk's  office  of 
the  county  in  which  said  property  is  situate,  in  a  book  to  be  kept 
by  said  clerk  for  such  purpose,  which  shall  be  labelled  "collatcr^ 
tar." 

%  24.  All  taxes  levied  and  collected  under  this  act,  shall  be 
paid  into  the  treasury  of  the  slate,  for  the  uses  of  the  slate,  and 
shall  be  applicable  to  the  payment  of  the  general  expenses  of  the 
state  government,  and  to  such  other  purposes  as  the  legislature 
may  by  law  direct. 

%  as-  All  acts  or  parts  of  acts  inconsistent  with  llie  provisions 
of  this  act  are  hereby  repealed. 

S  26.  This  act  shall  take  effect  immediately. 


n 

^^V  INDEX. 


Adams.  Prof.  Henry  C,  cited, 

AdminislraUve   classf  heal  ion 

76- 
Adminliltalive  moclilneiy  for 

Alabama, 


of  I! 


5,350.    ! 


s  of,  408.  See 
lableB  of  rewnuesand  expendilur 
valuation  a\  propcrlf.  ralei  of  tw 
lion,  and  debts. 

Allinson  anil  Penrose,  cited,  40,45. 
Appeals,  369. 

Apponionmi  laies,  defined,  78. 
Arltansas,  sulistlcs  of,  410.    See  aiso 
tables  0/ revenues  audi 
if  proprrty,  1 


on,  etc,  in,  4S0.    See  also  cc 

*e  table.  478. 
.    Ballitnoce  Tax   Commission   Report, 
:  quoted  on  discouDt  for 
a  taxes,  354. 
Books.  laxatioti  of,  in  Maiyiand,  331 ; 


in  of  lues  In,  90. 


n  of.  in  Ohio, 
I  of coUec 


Armstrong,  C. 


kl.,  cited,  15,  nale. 
axes,  in  vfvfi,  114;  ' 
counties,  360 ;  in  cii 


ilhms.  taxation  in.  35.  96,  a?. 
Lllanla.  license  taxes  in,  305;  i 
of,  476,    See  also  comparaliv 


Back  Bay  lands  of  Massachuselli.  067. 


Bequests,  see  Inheritances. 
Berlin,  receipts  of,  53. 
Board  of  rqu all  1.1  lion  In  Conneeticul, 
140:  in  New  York,  1B4:  in  Illinois, 


ion  in  Atbens, 

)n  of.  In  Maiy- 

003;  statistics 

I  VBluatlon  cA 

485.    See 


.    Boston 

of,  471 :  table 
property,  laxati 
also  comparative  table,  478. 
,    Braunschweig- WolfenbQUcl,  die 
Business  licenses,  303. 
Business  taxes.  71,  311 ;  classes 
lecoinmendallons  concerning, 

C. 


.34- 


,   191 :   gruund-reni 

»lisliesof,469i  lahle 
n  of  propeity,  taxa- 


^^"i^^H^H 

536                                                 INDEX.                                              ^H 

Canard,  quoted  on  laies,  ^46.         faos, 

and  taxation,  397 ;  regarding  mtirfg^B 

Chu-latie  (N.  C.),  biuiocss  licenses  in, 

pal  finance  and  taxation.  ^03. 

Cook  County  (111.),  valuation  of  prop- 

304; vaLuatian  of  propcrlj'  in,  507. 

erty  in,  198. 

Cooley,  Jmig.  T.   M.,    deHniiion    of 

taxes  by.  4:   quoted,  .1.  14,  17,  19, 

Clieslc-Hown  (Md.),  plan  o(  rental  of 

13.04. 

cgllege  lands  at.  965. 

ClneagQ  Lam  Tirnu  quoted.  518. 

Chicago,  statistics  ol.  .471;  ub!c  shotr- 

ing  taxation  of,  338.                     ^^_ 

Coimty  assessors.  360.                      ^^^H 

Custom  duties,  74.                         ^^^| 

liLble,  478. 

Church  buildings,  taxation  of,  344- 

^1 

Cicero,  quoted  on  taxation,  aj. 

Cincinoati.  table  showing  valuation  of 

Debts,  state  and  municipal,  C0B1^^| 

property,  taxes,  etc.,  of,  49a 

tionsl    provisions    doaceming.  j^^^H 

siBtisdcal  table  showing.  513.       '^^H 

pared  wilh  country,  14a. 

Del.ivrare.  taxation    in.   in   1796^  Xji^^ 

Citj-  assessom.  14a. 

ia5,  laS,  130;  statistics  of,  al  presrtt 

CollBlcral  inheritances,  taxation  of,  in 

415.     See  also  tables  of  revcniies  and 

Maryland.  316;   in   Nc*  York  and 

Pennsylvania,  317;  law  concerning 

rates  of  taxation,  and  debts. 

lajcation  of.  in  New  York,  5^. 

Degressive  taxes,  77. 

Collection  nf  (axes,  1796. 138 ;  cost  of. 

Direct  taxes,  as  defined  by  the  PhjBio- 

130.    See  also  sladBticB  of  states. 

crats.64;  byLeroyBcaulieu.66,76; 

Colonial  taxation,  105. 

by  Prof.  Knics.  67:   by  the  aaihor. 

Colorado,  statistics  ot  413.    See  also 

69;    sub-classes    of^  71:    compuEd 

valuations  of  properly,  rates  of  ta»a- 

lion.  and  debts. 

indirecl  bvored,  88;  cost  of  collec- 

Columbia College,  plan  of,  in  rental  of 

tion,  90. 

lands,  a6s. 

Discounts  for  early  payment  of  loiei. 

ConnecUcut,  taxation  in,  in  1796,  i.g. 

^■. 

laa,  124,  laB,  119,  130;  during  the 

Domains  and  forests,  revenue  derived 

transition  period,   133;   tixaiion    of 

from,  in  Europe^an  countries,  49,  50. 

Duties,  in  colonial  days.  1.4.              ^H 

of,  414.    S«  also  tables  of  revenues 

^1 

erty.  rates  of  laxntion,and  debts,  and 

jH 

grand  list  of  i864-,S85.  503- 

Educational    and    benevolent    insUh- 

Connecticut  Special  Tax  Commission 

lions,  laiailon  of,  345. 

Report,  quoted,  133. 140, 188. 

Egleston.  Melville,  cited,  iia. 

Conscience  money,  113. 

England,  gas-works,  water-works,  and 
street  car  lines  in,  53;   relMioa^^ 
twccn  taxation  and  Qbeny  hv^^B 

lional,  397;   regarding  state  finance 

coat  of  collection  of  laxei  lti,gia^^H 

k 


Ensley,  Mr.  Enoch,  quoted.  aiB.  iu>/r; 

cited,  333,  HOU. 

Equali  ration,  boards  of,  in  New  York. 
184;  methods  ol.  185;  of  whom  cam- 
posed,  1S6:  in  lUlnoii,  199:  metiiod 
ol,  compared  with  thai  of  New  York, 

Eiecutots  and  Hdminislralois,  lax  00. 

In  Maryland.  317. 
Ekpcnililurcs  of  stale  conipoxed  wt(h 

ledcn]  and  local  expenditures,  353, 
Flxpenilifurea  and  ret:eipl3of  dtiea,46 


454- 


Fswcelt,  64 ;  cited  on  income  tax,  395. 

Federal  Income  lax,  returns  of.  300. 

Federal  interference  in  local  taxation 

335- 

Federal,  stale,  and  local  bodies  I0  be 

coniidcred  logether.  »n 

Fees,  defined,  74,  Ila. 

Flualing  CBpilal,  taHBtion  of.  siS;  lien- 

efil  of  exemption  ot  from  taxalion 

Florida,    stalislics    of,  416.    See  also 

taljics  ot  revenues  and  expenditures. 

valuations  of  property,  rales  of  taxa- 

lion, and  debts. 

Foraker.  (7™™w-.  quoled  on  laxalion 

of  personally  in  Ohio.  155;   on  lax 

la«s  in  Ohio.  is&;  on  inlernal  im- 

pro«menls  in  Ohio,  387. 

Forest  cnliure  In  Ihc  Uniied  Slates,  48. 

Foreals  and  public  domain,  revenues 

from,  49,  50. 

90. 
Franchiic  lax,  defined.  73. 

Franktin,  Benjamin,  bequesi  of,  39. 

Gas-works,  in  Paris,  Ja^  in  Berlin,  53: 
itiPrussii,S3:inEnKluid,53;  proliU 
from,  aij ;  piofilableness  of,  37a 

George.  Henry,  views  of,  on  taxation 

Georgia,  laxBIion  of,  in  1796,  tao,  isi% 
laS,  lag,  130;  experience  of,  160; 
present  lax  syslem  of,  i6oi  assess- 
nienl  of  property  in,  161 ;  cily  and 
town  properly  in,  1C14 ;  taxalion  of 
noies,bonds,  elc,  in,  164;  productive 
property  of,  214:  slalisllcs  of,  417. 
See  also  tablet  of  revenues  and  ex- 
penditures,   valuations  ol  property, 

Goodnow,  Pre/.  Frank  J„  54. 

'^ovan,  //fffi.  Geo.  M..  on  laxalion  of 

railroads  in  Mississippi,  317. 
Greece,  taxation  in,  a6. 
Green,  J.  K.,  quoted.  59,  60. 
Gross,  Charles.  Pi-D..  quoted  on  tai&- 

1  oflhe  Jews,  33. 
Ground-rcni  in  Baltimore,  366, 


H. 

Halier,  Karl  Ludwlg  von,  tiled,    34. 

Hearlh  and  window  laxes.  43. 
Hewilt.  /icH.  A,  S.,  message  ol,  quoted, 

3=1- 
High  liceiijes,  283. 
Hill,  Got'eruBt,  quoted  on  taxalion  in 

New  York,  176,  178, 
Hills,  Mr.  Thos.,  quoted  on  discounts, 

35s- 
Hllchcock,  Pro/.  Henry,  quoted,  37*, 

377. 
Household  goods,  taxes  On,  334. 

:y,  Prv/iuQr,  quoted  00  taxation 


Illinofs,  constllution  of,  cii 


194:  •■ 


soi; 


196  i  realty  and  peisonall^F 
pared,  198 :  board  of  equaliialion  in. 
199;  productive  property  of.  an; 
liquor  license  in,  383;  jisiisiics  of, 
41S.  See  also  tables  of  revenues  and 
expendilares,  taiualions  of  propcny, 
rales  oF  nuution,  and  debts, 

Illinois  Bat  Association,  report  of  com- 
mittee of.  quoted.  319,513- 

Illinois  Hevenue  Commission  Report, 
quoted,  197;  on  equaliiation.  253, 
imU ,'  on  assessment  of  properly, 
351 ;  on  oalhs.  331 

Income  taies,  71,  aBy:  posilioa  of,  in 
a  system  of  taxes,  aSj ;  equality  of 
taxation  impossible  vrilhoot.  aSy; 
thitncss  of,  aS8;  ol>jeclion  to,  390; 
promote  good  government,  afig ;  com- 
pared with  taxation  of  personal  prop- 
erty,394;  introduction  into  England, 
394;  why  federal  income  lax  unsuc- 

niclpal.  396:  cost  of  collection  of. 
agS.Hnle;  assessment  of,  997;  suffi- 
ciency of  low.  300;  In  American 
states,  30a ;  all  income  above  certain 
modetate  ciemption  subject  to.  303; 
benefits  of,  lo  property  owners.  304 ; 
progressive  versHj  proportional.  305 : 
favorable    lecling     regarding.   307 ; 

Indiana,  ilatistici  of.  419.  See  also 
lablos  of  revenues  and  enpenditufes. 
valuations  of  property,  rales  of  taxa- 
tion, and  debts. 

Indirect  laxes.  as  defined  by  the  Physi- 
ocrats, 64:  by  L^eroy-BeauUeu,  66, 
76;  by  />!■/  Knies,  67;  by  the  au- 
thor, 69 ;  ongin  of.  6S :  classes  of. 
70,  73i    compared  with  dl 


lieflyla 


i.79; 


violate  principle  of  equality,  80 :  In- 

duce  pauperism,  83;  obstmct  rrad=, 
B3-.    conduce  10  monopoly,  83^  are 

locracy,   85^    combination  of.  with 
direct  lavored,  38 ;  cost  of  coUeclion 

Industry,  taxes  on,  243. 

Inberitances  and  bequests,  taxation  of, 
31a;  exemption  of  certain  amount. 
31S;  literature  on.  300,  aiVf,'  Com- 
ments of  Chicago  ^ow  TTHi'JOn.siS: 
Inll  introduced  into  Illinois  legisla- 
ture concerning.  S19;  New  York  law 
regarding,  533. 

Inlemal  improvements,  recommenda- 
tion to  repeal  conslllnlional  provision 
concerning,  384.  See  also  under 
Constitutional    Proviuons. 

Internal  revenue  laies.  73.  See  also 
Indirect  Taxes. 

"  Instructions  "  of  Georgia  comptrotler- 
gencral,  quoted,  164,  165. 

Iowa,  statistics  of.  400.  See  also  tables 
of  levenues  and  expenditures,  valua- 
tions of  property,  rales  of  laxBliDii, 
and  debts. 


] 


Johns  Hopkins  University,  reasoi 

nol  taxing,  347. 
Johnston.  Alexander,  died.  aa8. 


tables  of  revenues  and 
valuations  of  propeily. 


^^^lE^V^^I 

^m                       m 

^P                                                                                                                            539      ^H 

^r      Kem    Cnunty   (Md.).  asiessmen)   of 

Lowell.  James  Russell,  quoted  on  taxes 

propcriy  iii,  191,  KOfe. 

in  Austria,  43;  quoled,  377. 

KeDlucky.   uxBlion  in.  !□  1796,  loo. 

117,  iiS,  lag,  130;  letter  coot-eming 

M. 

poll   ini   in,   3[i;   sialjslicl   o(,  493. 

See    also    lables    of  revenues  and 

MeComas,  amendment  to  coiiMilution 

proposed  by,  aga. 

o(  properly,   rales   0/  taxation,  and 

McMasler,  quoted,  114. 

debts. 

Macon,  poll  mx  in,  aio. 

King,  Afr.  Francis  T..  quoted  on  »«v- 

Maine,    statistics    of,   435,      See  also 

ings  banks  in  BalliiiKire.  343.  343. 

lables  of  receipts  and  expcndiluret. 

Knies,  PrBfi$s-r.  drfinilion  .if  taxis  by. 

3;    cloiiitication    of  taxes    by.  67; 

lion,  and  debts. 

quoted  oa  lees,  74.  ■««■ 

Maine.  Sir  Henry,  quoted,  376. 377. 

Marah-ill,  CkitfJMict,  quDlvil,  6. 

L. 

Martin.  Luther,  lax  levied  tbr  use  of,  5. 

Maryland,    declaralion    of   rights    of, 

Ijtnar,  J.  R.,  quoled  on  Georgia  syv 

quoled,   16;    Mirljf   finances  of  46; 

taxation  in,  in  .79O.  l»,   "l,  l«S. 

Land,  taxes  on.  In  1796,  I19. 

iia,  t»g,  130;    luxation   during   the 

Lcipiig,  budget  of,  5a. 

Iransilion   period.   137;    lamlion   of 

Leroy-Beaulieu,     Paul,     definition     of 

by.  66 ;  definition  of  direct  tuxes  by. 

la«  in,  316;  .■xecutors-  and  adnunli- 

76;  cited,  sa. 

Levermore,  died,  B :  quoled,  37, 

lions   concerning    taxation    of   rail- 

Lewis.  John  L.,  legacy  of,  40. 

License  inies,  303;    evil  Influence  of. 

of  corporations  in,  338;  concerning 

ao6;    on  nalural  monopolies  urged, 

iHxalion  of  slocks  and  bonds  in,  332: 

ao8;    on   manufeiclurc   and   sale    of 

liriuor.  a8o. 

tion  of.byaulhor.  394;  st,.tisticl  of. 

4a6,     SeeBl50taht«of.evenu»s»nd 

sale  of,  aEo. 

Uteralure  of  taxation,  94. 

1  jlurgiei,  j8. 

quoted,  38.  aaB;  on  taxation  ot.tocfc. 

Local   Bxpfuditurc,  incretue   in,  fester 

and  bonds, 333;  on  Uxalion  of  church 

than  that  o(  stale,  353. 

buildings.  344;  on  system  of  admfn- 

Local  taxation.  Interference  of  fed<^r3l 

laxes.360. 

!H5. 

LfllterieS.41.  113. 

la.  note:  taxation  in,  in  1796,  119,        ^H 

itii,  114,  138,  199.   130:  taxalion  in        ^H 

the  transition  period.  138  ,  prnduclive        ^^H 

property  in.  st4:    income   taxes  fn,        ^^| 

lions  of  properly,  rales  of  Uxalion. 

30a.  303 ;  slalistits  of,  417.     Sec  ..Iso        ^^1 

and  debts. 

tables  ol  revenues  and   eipendiiuie         ^H 

^^^H^^^HI 

^^^^^H 

Nebraska,  high  license  to,' a^flS^^^ 

ratcj  of  iiuraiion.  and  dcbls. 

tics  of.  433.    Sec  also  laSles  td  rcve. 

nues  and  eipeDdilures  of  states,  valu- 

quoled, 37. 

ations  of  property,  rates  of  laxation, 

Mauachnsclts  Tax  Cammission    Rc- 

and  debts.                                             .^ 

pon,  quoted,  14,  Halt ;  quoted  on  dis- 

Nevada,  slaiislics  of,  434.     See  ah«.^H 

c™nHB.3S5."*«'- 

revenues  and  expenditures  of  state^^H 

Meriwtlher,  C,  on  royalty  from  phos- 

phate rock  in  South  Cnrolina.  459. 

lion,  and  debts.                                         ^| 

Michigan,  liquor  IkctiHS  In.  =83;  lU- 

Newcomb,  Pro/.  Simon,  died,  3S7. 

tislics  of,  439.     See   also  tables  ol 

New  HamiHhire,  laxation  in.  In  1796, 

MvenuES   and    eipendiiures,  valua- 

119, lai,  134.  l"8.  >3o;  duHng  the 

tions  of  property,  rales  of  taxation. 

transition  period.   137;    taxation    oJ 

and  debts. 

Middle  Ages,  revenues  of  the  stale  in. 

of.  435.    See  also  tables  of  receipts 

30,  40.  88. 

MitI,  John  Stuart,  qtioted  on  laxation. 

of  properly,  rates  of  taxation,  and 

337;  on  tnoonie  lax,  395;  on  inheri- 

debts. 

tances  and  bequests,  31a. 

New  Jersey,  taxation  of  bnd  in,  in  179&, 

Minneapolis,  liquor  Ucense  in,  384. 

130,  133.  134.  i»8,  130;  siMtstics  of. 

Minnesota,  high  license  In,  aS4:  sta- 

436.     See  also  tables   of  revenues 

tistics  of,  430,     See  alio  tables  of 

of  property,  rates  of  taxation,  and-   ^H 

tions  of  property,  rales  of  taxation. 

^H 

and  debts. 

New  York,  early  taxation  in,  44;  tuMi^^^H 

Mississippi,  mx  o(  railroads  in,  327: 

tion   in,  in    1796,  119,  191,  ia|,  Ul^H 

elatistics  of.  431.    Sec  a-ha  tables  of 

130:  comparison  of  taxation  of  tealql^^H 

revenues   and    ejcpenditurej,   valua- 

tions of  properly,  rates  of  taxation. 

'      and  debts. 

Missouri,  high  license  in,  383;  siatistics 

of.  184;  pioduciive  properly  of,  atft^^H 

of.  439.    See  also  tables  of  revenues 

trust  funds  of;  315 ;  incnnse  in  i«(i^H 

and  local  taxes  of,  ato;  collateral  I^^H 

erty,  rates  of  laxation,  and  debts. 

heritance  tax  in.  317;  slatislia  dB^H 

Modified  prohitritlon.  aBa 

iBi6-iBS7,497;  table  showing  v.r,*^M 

Montreal,  busineia  tai  in.  313. 

Mortgages,  etc.,  exemption  of,  Irom  tax- 

1887.457 ;  salt  works  of,  4M ;  Ian  tV^^H 

ation,  33s;   benefits  of  exemption. 

garding  collateral  inhetitance  laa  Il^^H 

33B. 

533.    See  also  general  tables  of  iwfe^^l 

N. 

properly,  rates  of  taxation,  and  t^^Ml^^^l 

New  Yorkand  Brooklyn  Bridge SlTM^^H 

Nashville  (Tenn.),  laxarioii  in.  333. 

Car  Line,  4S.                                    3^^| 

Natoral monopolies, a6q:  defined.ifig; 

New  York  City,  cost  ol  collcclion  f^^l 

taxes  in.  93:  statistics  of,  47a:  >«1>^^H 

OoM  concerning,  171. 

showing  valuation  of  properqr  ait^^H 

toialion  of,  493.    See  >tio  compua- 
live  table,  ,78- 
New  Voik  Tax  Commission   Repon, 

Nonh  Carolina,  taxaiion  in.  In  1796, 
119,  IK.  117.  laS,  139.  130;  taxaiion 
of  incomes  in,  3(J3;  ilalisliiis  ol.  439: 
■able  showing  rcceipis,  etc.,  o(  1868- 
1887,458.  Sec  also  tables  of  revenues 
and  expenditures,  valuations  of  prop- 
erty, rales  of  laxBlion,  and  debts. 


Oalhs,  163,  333. 
Occupation  10x0,303. 

riod,  !» ■  experience  of.  L|b ;  con- 
stitutional provisions  of,  nj;  real 
estate  in,  r4S;  taxation  of  pcnonal 
estate  in,  151;  provisions  for  assess- 
menl  ol.  153;  lax  laws  of,  156;  ila- 
lislics  of,  157;  increase  in  state  and 
local  Uies  of,  859;  experience  of, 
wlih  puWic  worlct,  3B7;  Ecneral  sta- 
tistics of,  440^  grand  duplicate  of 
1B00-18S6,  455.    See  alia  tables  of 

tions  of  property,  rates  of  tajiation, 
and  debts. 
Onondaga  Sail   Springs    Reservation, 


Pearce,  James  Alfred,  letter  of,  on  as- 
sessment of  property  In  Keni  County 
(Md.),lgl.  vafr. 

Pennsylvania,  early  taxaiion  in,  45; 
constitulioD  of,  quoted,  57;  taxation 
In.  in  1796,  lao,  lai,  ia6,  iiS,  109,1301 
during  llie  Iransidun  period,  138; 
high  license  in,  383:  income  lax  in, 
303;  collateral  inheritance  lax  in, 
317;  laK  on  corporation*  in,  398; 
consiilution  of,  quoted.  393;  stails- 
Iic3  of,  44a.  Sec  alio  getkeml  table* 
showing  revenues  and  expenditures, 
valuations  of  properly,  rales  of  laxo- 

PennsylvaniaTaxComniiBsion  Report, 
quoted,  ig(j.  Keif. 

Penrose.    See  Allinson. 

Percentage  taxes,  defined.  78. 

Perry,  Mr.  A,  J„  quoted  on  inxalion  in 
Illinois,  93,  note. 

Personal  property. growth  of,  compared 
with  real.  149 ;  difficulty  of  discovery, 
1441  taxaiion  of,  in  Ohio,  153;  pro- 
viuon  for  aucutnenl  of,  in  Ohio, 
153:  laxaiion  of,  in  Georgia,  tto; 
Idxallon  of,  in  Wisconsin,  Ij*;  in 
West  Virginia.  174:  in  New  York. 
176;  in  New  Hampshire.  iSB;  in 
Connecdcul,  ]B8:  in  Maryhmd.  190 ; 
cettiiin  liinds  of,  to  be  eieni|it  fioni 
1.33S- 


rcvenucs  and  expenditun 
IS  of  property,  rates  of  lax 


'    Perthes, 

'    Pliiladelphia 


l.3t- 


of,J 


;  high  II 


Paris,  revenues    of,    from    produclive 

property,  51 
PBIten,/>r.  Samuel  N.,euBy  otquoicd 


table  of  rvccl|>ti  and  cxgiendi- 
(urcs,  475:  labk'  showing  valunlion 
of  propeny  and  tuioition.  1887,  494. 
Sec  also  eomjiaralivi--  table,  478. 

Phosphate  lieib  of  Soulh  Carolina,  atj. 
4S9. 

PhysiocraB,  classiii cation  o(  laxc*  by, 

Poll  laiei  In  ancient  Greece,  aj.  in 
England.  43;  defined,  71:  in  a.to- 
nlol  days,  lit;  in  Uniied  Snies  at 


542 


INDEX. 


present,  209;  in  Georgia,  210;  in 
Kentucky,  211. 

Productive  property,  revenues  from,  in 
South  Carolina,  213;  in  New  York, 
214;  in  Georgia,  214 ;  in  Illinois.  214; 
in  Miissachusetts,  214.  See  also  do- 
mains, forests,  gas-works,  water- 
works, etc. ;  also  statistics  concern- 
ing states  and  cities. 

Progressive  taxes,  77.  Sec  also  under 
Income,  305, 

Pro|>erty  taxes,  71;  classes  of.  72;  in 
colonial  days,  72 ;  reason  for  equality 
in,  139.    See  also  Personal  and  Real. 

Proportional  taxes,  77.  Sec  also  under 
Income,  305. 

Providence,  valuation  of  property,  tax- 
ation, etc.,  of,  495. 

Prussia,  water-works  and  gas-works  of, 
53 ;  cost  of  collection  of  taxes  in,  90; 
decentralization  of  administration  in, 

255 »  ^0^^' 

Q. 

Quebec,  quarterly  payments  of  taxes  in, 

359- 
Quit-rents,  112. 


R. 


Railroads,  taxation  of,  in  Germany, 
51;  in  Wisconsin,  170;  remarks  on 
taxation  of,  324;  gross,  not  net,  reve- 
nues to  l)e  taxes,  3J4;  recommenda- 
tions of  Maryland  Tax  Commission 
concerning  taxation  of,  325 ;  taxa- 
tion of,  in  Vermont,  326 ;  in  Missis- 
sii>pi,  327 ;  valuation  of  property  of, 
502. 

Rates  of  taxation  in  transition  period. 
140;  at  present,  496.  See  also  sta- 
tistics of  states. 

Ran,  P/ofessor,  classification   of  taxes 

t\v.  65. ' 
Ri-cord  and  Cunie  quoted,  492. 
Real  estate,  in  New  York.  176;  taxation 

of,  in  Ohio,  248;   reasons  for  taxa- 


tion  of,   246;    exemption  oC 
state  taxation    favorrid.  251; 
in  equalization  of  state  taxes  00  iril 
estate,  251 ;    plan  for  securing  |rt| 
of  income  from  taxation  o(  to 
and  cities,  264 ;  valuation  oC  in  s&kI 
500;   in  cities,  480.     See  also  \jbxS 
Property,    and     Personal    Pmpcs 
and  statistics  of  states  and  dtks. 

Real  taxes.  71. 

Receipts,  see  Revenues ;  also  Eipoifr 
tures. 

Referendum,  353. 

Regalia,  32. 

Regressive  taxes,  77, 

Reitzenstein,  Barom  von,  quoted.  13L 

Rents,  tax  on,  310. 

Revenues  of  the  state  in  the  liidft 
Ages,  30,  40 ;  sources  of,  at  pitseH 
other  than  taxation,  47 ;  froa  do- 
mains and  forests,  49,  50;  froa 
gainful  pursuits,  50;  from  prod» 
tive  proix'rty.  213.  214. 

Revenues  and  expc-nditurtrs,  of  stales. 
407 ;  tabular  statement  of,  opp.  4W 
of  territories,  454  ;  of  cities,  469;  tib- 
ular  statement  of,  478. 

Rhode  Island,  early  taxation  in.44,1?. 
141;  in  1796.  119,  rar,  125.  laS,  150; 
general  statistics  of,  443.  See  xso 
tables  of  revenues  and  expendinacs^ 
valuations  of  property,  rates  of  tax- 
ation, and  debts. 

Road  tax.  209. 

Kt)gers,  Thorold,  quoted  on  taxaoco. 
18. 

Rome,  taxation  in,  28,  ag. 

Roscher,  36,  49.  53,  60,  85,  88,  9a 

S. 

Salt  springs  of  New  York,  466. 
Savannah,  taxation    of   real   and  pa^ 

sonal  in,  166-168;   liquor  licenses  m. 

203 ;  plan  of  dispH>sing  of  real 

in.  264. 
Savings  banks,  taxation  of,  340. 


Sawjwr.  Him.  Geo.  T..  cilcd,  13B,  188. 
Scheel,   Pn/.  ion.  aa    omiership   □ 

railroads  by  ilsle,  51. 
Sehfinbcig.  ciled.  77. 


Erif  Canr.1,  3S8. 
Shi^rmnn,   Senator,    clauificalioi 

liixcs  by,  05. 
Smilh,  Adnm,  on  uxes,43;  Tour  ci 


4S9;  I 


ot.  ♦ 


mil  cipcndi- 
tufcs  of  stales,  vidualionsof  properly, 
rales  of  taxation,  and  debts. 

Sinic  cipenditiires,  compoccd  wi<h 
federal  and  local,  954-960;  rvmarks 
upon.  361;  table  ihowiog.  453.  See 
also  statistics  o(  stales. 

Slocks  and  bonds,  taxation  of,  in  Mary- 
land, 339. 


I,  PtB/.  W,  G.,  cited.  306, 


Taxation,  origin  and  growth  of  modem, 
35:  in  Grwcc  anil  Rome,  36;  in 
Jupnn.  19;  in  Ihe  Middle  Agct.  30, 
early  Ar     "*-  '    .. 

enucs  from  other  soiirt«  than,  47, 
imponunoe  of.ss;  tendencies  of,  57. 
and  libcrly,  58;  and  social  reforin, 
G9;  lilcniture  of.  94:  colonial.  105: 
in  1796,  117;  during  the  Imnailion 
period,  131:  rates  of,  during  transi- 
tion period  compsred  with  prrsenl, 
140;     ■  ■ 


early  tnaidCnl,  141 ; 


Ohio.  148;  ot  personal,  in  Ohio, 
15a;  in  Georgia,  160;  in  Wisconsin, 
170;  in  Weil  Virginia,  1731  in  New 
York.  17G;  of  real  and  priKinal, 
compared,  179;  in  New  Hampshire, 

dependent  in  mallcra  of.  SI7;  of 
floating  properly,  ai8;  benefits  of 
ciemplion  of.  from.  033;  inieifer- 
eace  of  federal  in  local,  335 :  preicnl 
melhods  of,  needlessly  demotaliiing, 
3991  principles  Cor  a  new  system  of, 
337;  lour  canons  of,  340-11431  of 
real  eslHte,  946;  exem|>tloa  of  real 
estate  from  stale  taxalioo,  951 ;  of 
natural  monopolies,  971;  of  oiaa- 
u&Giure  and  sale  of  inloKlcating 
liquor.  aSo;  of  incomes,  187:  of  In- 
heritances and  bcquEsli,  31a:  ol 
tailroads.  334 ;  of  corporeiions.  328 ; 
of  houiehoid  goods,  334 ;  ol  savings 
banks.  340;  of  churches.  344:  ol  ad- 


eeming. 375. 
Taxes,  various  definilions  of,  yi;  au- 
Ihoi's  dcliniliDn  of,  6 ;  in  what  paid,  6; 
one-sided  iransler,  13;  not  debts.  t8; 
power  to  impose  legislatife,  19;  te- 
s'ridion  of  power  to  impose.  10  pu|>- 
ular  body,  10:  icprcscnuiion  nut 
always  accompany.  31;  regular  and 
voluntary  cunlributions.  aa;  aibi- 
Irary  nature  of  definition  of,  33; 
power  [o  levy  nol  be  delegated,  14; 
in  Greece  and  Rome,  aa;  in  Japan, 
ai):  in  Middle  Ages.  30;  suIkii  ill  nuts 
hi  early  budgets,  35;  voluntary  na- 
ture of.  In  earlier  dayi,  37;  paid  at 
first  by  weak  and  defcncelw.  4a; 
In  early  history  of  America.  44;  n- 
turns  of,  55;  clauificailon  of.  63: 
idministniiiTC  classification  of.  76: 
other  mode*  of,  77:  In  the  colonira, 
105;  voluntary  conlribullnnt  early 
gave  way  lo,  109:  in  1796,  iiS;  on 
land,  1191    on   other  obfccts,    tao; 


544  INDEX. 

BppoTlfonmmt  and  collection  of  taxes 
in  1706.  133:  IBXCS  on  real  and  per- 


AChool   diilncl,  360^   c 


(foodi,  334;  on  savings  banks.  340; 

and  bencvolenl  inilitniions.  345. 
T«i  Eyck.  Hcnrj  James,  died,  306. 
Tennessee,  taxallon  in,  in   I796.  117. 


Texas,  suiistics  of.  445.  See  also  tables 
□f  revenues  and  EUpendllurei  of 
Btatcs,  valunlfans  of  pmperl;,  ralei 
of  laxition.  Hnil  debts. 

Thuinns,  Judge  E.  A.,  died,  319,  wM. 

lliucydidcE,  03. 

Titles.  lo'e  i>r.  41. 

Toranio.  rental  of  lanil  in,  365,  358. 

Tranriiiian  period,  131. 

Trust  hinds.  315, 


U. 


United  SUtes,  fore; 


tion*  in,  339,  iwA .-  slaliiltis  al,  4 
Sec  alwi  labid    showing 

lion  ol  ptopcrty,  ralre  ol 
and  debts. 
Virginia,  laxntion  in,  in  179! 
i^.  139,  130;  during  ihe  iian»iii« 
period.  137;    income  \axt 
sruiJTlo  of,  449.     See  •>)« 
revenues  nnd  expenditures 
valuation  of  property,  rates  of  to 
tion.  nnd  debU. 

W. 

Wagner,  F^.  Adolf,  50,  63.  74,  *. 
Walker.  C™,  Francis  A.,  Cited.  4 

133.303. 

Wiuliingian,  quoted  on  education.  316. 
Watches,  returns  on,  tn  f^jlBdHphia.    ( 

Waier-worlts,    ownenbip    ot   48 ; 

England,  54. 

Weill.   David  A.,  quoted  on  oallis  in   \ 
lax  assessments,  233. 

West  Virginia,  laxnlion  in.  1 
tics  of,  450.  See  also  lables  showing  k 
revenues  and  expenditures  of  stalfv^  jj 
viiluJiions  of  pro|irn)',  rales  of  IB 

WeslVirgioiaTaiCommissionRepoM,  I 

dted,  137;  quoled,  173.  233. 
Wilson,  C.  J.,  cllod,  41,  4a,  60,  69. 

I   railroads    tn^  I 

170;  propi^ny  lax  in.  17a-  siatisQnt  fl 

of.  451.      See  also  lablea  showing -F 

revenues  and  expenditures  of  itaUV'fl 

.tions  of  property,  rates  of  1 

1,  H<m.  Oliver,  report  of,  c 

WonhingtuD,  Mr.  T.  K.,  quoled,  4) 

cited,  138,  303. 
Wriijlii,    Hen.    Wm.    A.,    quoted    1 

work    of  grand    juries  ii    "■ 


50CIALISn.  An  Examination  of  its  Na- 
ture, its  Strength  and  its  Weakness, 
with  Suggestions  for  SOCIAL  RE  FORH. 

Tnrl  I.,  Ttic  KiMK  ul  SudJiiin.  I'ait  U-,  The  Slrenylh  ol  Siicifll 
Pari  III.,  The  Weakness  of  Socinlism.  Pari  IV.,  The  Golileii  Moan,  or 
Practicable  Social  Relonn.  By  Richaku  T.  Elv,  Ph.D.,  LL.D.,  Pro-  I 
lessor  <tl  Political  Economy  niid  Direcloi  of  Ihc  School  ol  Economiei, 
Political  Scu-nee,  and  Miaiory  in  ihe  University  ol  Wisconsin.  Vol.  3  in 
CtowvU's  Libroiy  of  Economics.  One  vol.  liii  +  441}  pp.  1 1  App<.-Ddici.'E; 
Bibliogrnpliy;   Index.     Goth,  $1.50. 

Dr.  Ely's  irapnttinl  and  critical  ireaiment  ol  Ihe  slrengih  und  weaknc» 
ol  Socialism  may  be  regaided  as  ihe  Iksi  prcsirnlation  i>f  ihis  siibjrct  that  J 
has  yet  appeared.      He  is  lair-minilcd  and  candid  enrmgh  to  rccogniu:  ibtt  i 
saving  principles  ol  the  system,  and  yet  fearlessly  points  out  its  dangers   | 
and  delects. 

Numerous  appendices,  contaioing  the  prc^mms  and  plnllonns  of  vaiiciui 
socialistic  bodies  and  the  hcsl  and  niost  exhaustive  biNic^aphy  to  l<e  found 
in  any  language,  add  greatly  to  the  value  of  this  volume,  which  will  be  I 
found  indispensable  to  students  ol  sodol<^,  and  of  gieal  value  to  the  J 


genci: 


jubtic. 


a  !KfaNi  irrt  t/llutt. 


el  a  •ubhci  otdcli  ^ 
iblic.    TJuinttni.    ] 


at  lime  luilalitM  hh  WD  U|h  npuiadoo  us  write 

\  upoB  Ihe  pubUc." — Pr^.JrrtmtH.  XaTmrmt. 

•r^utrBlfttfkUutnunliiarifytKialr.    It  • 

-'  •^'  " irf  Ihe  Mbjcci.ainl  ol^muv  of  •'■- 


"On  the  whole, lldi nU! be  ngirdcdulhc  1 

li  eveiy  ctir  lordo(  il»lf  mo™  «nd  men  upon „  , , 

EBt  a»n  «  u>.d>|r  nnut  nt  leac  dEfinlln  Meu  o(  vhii  Sodaliin  h,  whii  lii  «n)i«ih    j 
as  well  a*  wtiu  In  wcakan*  U,  nul  wtiai  ibe  giMa  mean  U.    Ttauc  definite  idaa* 
an  whit  PnJflfttfto-  Elv  hu  nUE  iolo  a  RHItthfilt  lor  lU  In  ihia  boc^.     In  dotAE  a    '     ' 
writer,  and  coDlcrrcd  a ' 
jml. 

It  tbamt  a  vtrf  ihomth  kaowl-    I 
-'  ■'■ warj  pbuia  of  it' 

iRBfih  aad  h^c  al  the  awnor^  poatiloa  wl[l  br  ■ekniiwledted.  (Iiw  ol  iba  meat  1 
•dainble  itditga  abaiii  tha  work  li  in  broad,  humane  irinpaii^i  and  Its  npotiiloa  Ol  'm 
elhlral  nottvEi » lanUni  amoiB  Ih-'  uoU  powsrfiJ  Eeunumk  laclan."  —  BnUam  fitraUi  T 

"Dr.  Khrii  a  cloac  uudenc, a  vtioKHia  IMikcr,  aad  la  delennioadl)!  f  ' 
Ui  ei>aelu>raH.  Thia*aluaM,«UdiiBiha  ibbd  in  Cnwell'i  Libivy el 
1  nnaif  one,  and  Kill  lake  tu^raaV  among  ttiebmlisol  Ihe  yeai."  — 0ulr 

"  /*rn  /«-  OiJIrit  lorn  tAr  fiMir  U /•rr-mHii  yiM  it  fidl  mil  mmir  n^am 
SBCut/iiKt  a>  ll  n  —  In  nalure,  ita  nhUoanptir.  ha  Malonr.  and  lit  Hieiatum,  wllh  a ', 

■dxxale  nar  appmuMU,  bal  is  aa  tmTKrliil  and  (inj>ie)uiflc«l  invali^lot.  Hotldnsli  1 
ciiouaicd,  and  naughl  leldinnilii  malice."  — rjiiwv*  '■fimri.  ■ 

"  '  '"'"^  '^~  tliDushlfiil  man  dI  1i>4l'y  lo  read  aiid  puoder.  In  preparatioH  lor  lb*  I 


work  ol  lo 


rrnw."  — Jtrti 


>./Ktt.. 


r-  n^»  m,ift  t-rfria, 


THOMAS     Y.    CROWELL    &    CO.,    PUBLISHERS, 
NEW  YORK:  46E.  I4thst.      BOSTON:  100  Purchase  St, 


LABOR  MOVEMENT  IN  AMERICA. 

By  Richard  T.  Ely,  Ph.D.,  LL.D..  author  of  ■•problenw  of  To-Di 
"Social  Asjiects  of  CbrUlianily,"  "  Socialism  and  Social  Rcfotm," 
lamo.     Ftice,  $1.50. 

"Every  InielliEcBi  ludET  in  ihecouiiuy  tritlfiBd  itk:  book  mou  lucful.' 
SfM*lka». 

''  Ng  utie  whs  wuhcs  lo  BWlcniiind  Ibc  problcRi*  of  bbur  ind  opiol  a 
wllheul  I>n[di:.r  Ely'i  waitt." —  XKiiiUr  Ctn-uit,. 

"  Proleuer  Zty't  voluina  ikKrva  ■)>»  oibIuI  itudy  a[  manufaciiiFen  ai 
af  Ubor  t>p*dall|r-    Ii  deil>  1Mb  wcii^mlniiiaictl  luu  mun  ihaii  ihEuiic 


-  am/and  Plaind 


5OCIAL  ASPECTS  OF  CHRISTIANIT 

By  RiCHAKD  T.  Elv,  Ph.D.,  LUD.,  aulhor  ol  ■'  Lal)or  Movement  | 

America,"  "  Pioblcms  of  To-Day,"  "Socinlism  and  Social  Refoi 
etc.  A  new  and  revised  edition,  with  ndiUlional  chapter,  entitled  " 
Social  Crisis  and  the  Church's  Opportunily."      Ilmo.     90  cIS. 

PProfe!i9or  Ely   has  no  respect   [or  shams.     He    shows  what 
sodalisin  is,  and  how  wide  the  gulf  u  between  the  professed  Christian 
of  many  churches  and  the  Christianity  of  the  gospel. 
The  book  has  been  in  use  foe  some  lime  by  a  number  oF  ad*iM 
Sunday-school  classes  engaged  in  Ihe  study  of  the  deeper  queitioi 
religion  and  life. 

"  Full  of  imciicalltr,  helpful  «jg:geniveiie»,  mi  pngnini  with  <dc«  en  Ilw 
pmblenu  ol  iixby.     Ha  belter  book  cauU  be  put  Inio  iSe  luDdi  el  1  beglniKii. 
depajtmcpt.    Therv  It  no  booh  In  itt  capacilr  so  Gilrutaled  bf  ii<  focal  coau»»,  d 
■ppKil,  conwi  JodEioeili,  and  finpjTlul  Matemenu,  In  convev  to  the  mind  <J  the  n 
the  rigbteouiiwq  r^  IbejilBt  for  (be  wudy  And  pncflce  df  hKUjiigy,  and  the  aiT 
af  IliF  coipel  of  Jcwa  Oiriil  u  meet  III  hieheit  denundi,  ind  lead  il  u  in  It 
mem.''—  da-initn  ^Mim. 

"  l<rafet»r  lily  hat  <re1l  earned  Ihe  rigbt  tn  mnik  bli  whale  mind,  and  tl  bd 
rigM-minded  ixuple  lu  koDW  whal  he  ■>]«."  — /Ufirll/iVi^H. 

I"  Many  a  ChrisLun  profeiaor  would  nin  imponani.  1 
Tfom  his  pa^B  about  the  irueiucHof  wealtb.  oppnnuniiii!.. 
"  Tu  the  coDKKntinus  Christian  iniin  they  wiU  be  orafiLible ; 
Ihey"'— — -  -"      ■  ■  ■  ■■ 

THC 
L 


he'cl^sl!^ 


Jlhviilllm 


r«Hlf0ilf 


ir  fuWiiktri  Kfan  rrcr^  ^friet.  I 


THOMAS     Y.    CROWELL    &    CO.,    PUBLISHER 

NEW  YORK  J  46  E.  I41h  St.      BOSTON  :   100  Purchase  St. 


PROBLEMS  OF  TO-DAY. 


I 


A  tliscuuion  al  protective  l»iRs,  tflxalion,  and  monopolies,  by  RiCKARD 
T.  Elv,  Ph.D.,  LL.D.,  oulhor  of  "Labor  Movement  in  America," 
"Taxation  in  American  Slates  and  Cities,"  etc.  Keviscd  and  enlarged 
edition,     iimo.     £1.50. 

This  work  B|ipeBls  lo  all  classes  and  conditions  of  men,  "  RepuLlicans," 
"  D.-mocrats,"  "  Independents,"  Legislalon,  Private  Ciliiens,  Merchant 
Princes,  Mechanics,  and  Day  Laborers.  All  are  alike  interested  in  the 
question  of  a  protective  tariH,  the  nature  of  monopolies,  the  welfare  of 
Ubor,  the  national  surplus,  the  moialit;  of  subsidies,  etc. 

-■  WrinsH  in  a-iimpatlial  spirit. "—rn»>Hnu/ffH;&l'>ir. 

"  Snimg  ai  ligoima."  ~  Agr  1^  Strtl. 

"  V/Kahe^^lw  it  al«y»  wottk  reSing^— S^'-*"  -Si"'      "'     ""' 

"  WMch  tnry  dliien  wlu,  lui  Ihe  but  ^Krclls  of  tbe  euunlry  nl  la»  thnM  nid." 


JAXATiON  IN  AMERICAN  STATES  AND 
CITIES. 

By  RiCHARU  T.  Et.v,  Ph.D..  LL.D.,  author  of  "Labor  Movement  in 
America,"  etc.      tamo.      $1.75. 

Professor  Ely  has  written  the  first  broad  and  critical  treatise  upon  the 
manifold  systems  of  taxation  that  obtain  in  our  chid  cities  and  States, 
I(  Is  a  work  of  immenie  research,  and  presents  in  a  tnnslcrly  manlier  the 
whole  compiei  subject  of  taxation,  as  well  a^i  the  inconiislendea  which 
prevail  in  parts  of  this  country.  The  volume  ii  mBile  especially  valuable 
by  numerous  and  carefully  compiled  tables  showlne  the  various  methodi 
of  levying  taxes,  and  the  comparative  results  in  every  Stale  of  the  Union; 
and  while  it  will  not  (ail  to  interest  every  lax-payer,  it  will  appeal  especi- 
ally to  tan-assessors,  lawyers,  legtslalors,  and  a]\  engaged  in  public  aSain. 


Fullodnlmstlncf 
Wl  h*VE  lound  ^1 


if  paiiiial  MMOMy 


—  Ktal  EilaU  KkstU  •>■ 


m  the  lint  to  the 


Fmalcitall  taakuUm,  or  ml  fstlfaU  B)  Ik,  fuUilHtr,  ■/ton  rrrii/l  'ffria. 

THOMAS    Y.    CROWELL    &    CO.,    PUBLISHERS, 
NEW  YORK:  46  E.  14th  St.    BOSTON:  100  Purchase  Si. 


LIBRARY  OF  ECONOMICS  «»  POLITIC 


r.  CROWELI,  a  CO.  ulie  plmure  in  inmiundTii  ihai  ihe^  have 
Lea  liijKjcni.iils  [UF  1  Knct  ol  vulumis  de^i;  wllli  lir.icly  kmiis  I  •  ..  (mh, 
inf.  .i.d  Ln.irucuve  inina«.  Theieriei  i«  <Plillnl  "  Utrjr.  M\^»<^ic>  vd 
,"  and  ii  under  Um  cdilarul  csdudI  oI  Prol.  Richard  T  Ely,  PhC.  Lt.  O , 
o[  of  PoBiica]  EcanoaiT.  ind  tHnaar  al  ibe  ikiiaa]  ol  tmn^ito.  PiJiiiul 

and  Hiuoty  at  (ht  tlaiveml^  at  WlKt»<iTi. 

prapoted  u  iuuETalnniciitirnBnUifailcrAli.uidlDiupply  oalr  the  bcM  liWi- 


,.lltijb)e  IQ  biikcn  and  A<>iiidcn  generiUy 
ilunc  ii  Prof.  Davtd  Klnley.  Pfi.D.,  Fr 


wol  Kcu 


STEM   <^H 

I.    TheauLhotoi 


"REPUDIATION     OF     STATE     DEBTS     IN     THE 

UKMTRD    STATES." 

Itv '-^'    ',  ,'     -,    '-.     "    V'h  D  ,  AuDtiale  ProfniDral  Pollllca]  E<oi»[ny  In  the  Uoi- 
rCTtiu  I  u.iik  which  detla  with  gaeal  Ihc  matl unpoiUnl  pliua 

Hi  ,\:>.  .  tUtri  \M  nolickiol  B>iucuIiRV«li|tili<nia>h>  Clniicd 

—  "  JIUkwwIu 


•■SOCIALISM  AND  SOCIAL  REFORM." 

dI.  Kichard  T.  Ely,  EiUtar  nl  iIh  Serict.    The  nork  w 
-     -  -i  tlw  Nitu«  ol  Sodalitm;  Pan  Tv-o,  w 


One  t«,i„ig  oi  th 

wcLillim^PinTlir.'Cof  111.- Wukae 
ir  Ptaclicabia  Social  Nclnrm, 


a 


bliDKraphy  add  in  ihe  value 
idid.  and  learlt»  inaiiaii,  a< 


"AMERICAN  CHARITIES:  A  STUDY  IN  PHILAN- 
THROPY AND  ECONOMICS." 

Unlverally.  and   latt  Supennieinlcnl   of  Chimin  for  ih;   Uulriet  o*  tAPlumbia.     Tlu 
■bo  are  thaorelicaliy  andpnitlicillj  uiicrt-icJ  ii  diamwt.    .jm.i,  *■.;;. 

•■HULL  HOUSE   MAPS  AND    PAPERS." 

Ixhe  fillhiDlunn  In  IhcKriei.  and  -ill  lumiah  an  KCOUBt  of  die  melhodkol  nixli*! 
(hlicelebralEdwKlilKtllcincat  h  Oiicikj. 

U  will  a]*o  include  a  a^ea  uf  careluUy  prepared  papen  by  Bpedaliau  un  wpia  «i 
vital  Inleieil  lo  itud^ntt  in  tnao\iig)- 

Ojic  of  ihe  moat  iraloabje  lieaturei  of  Ihii  bcHik  will  be  a  : 
cTurta  ahowiag  the  naiiunality  and  wagei  ol  all  famillet  in  a  co 


^ciiDo'^J'cS 


Albert  Shaw,  Ph.D.,  Anerli 

—  „jM  I __  _» ..^  ^u^  popidarand  UEful  ifoli 


Bhaw  will  be  on 


Editor  ol  Iht  Rnlrm  rf  Rtvicni.  U  engaged  la 

Ibe  leTiea,  Ihe  title  ol  whieli  will  be  anDounnd  auh. 

the  public  that  ibe  work  by  Di. 


THOMAS  Y.  CROWELL  &  CO.,  "ffoViSi.""' 


I 


THE   INDEPENDENT  TREASURY  SYS- 
TEM OF  THE  UNITED  STATES. 

By  David  Kinlbv,  oI  the  UniveisUy  of  \Vi5cons.in.  Clolh,  lanio. 
Tiii.+3i5  p|i.     Appcntlii,  iatli:x.     $1.50. 

An  hbtorical  uidcrilicil  examination  □!  this  impoitanl  inslilulion.  A 
work  which  will  prove  valunble  to  bankers  snil  finitncicrs  genetnlly,  u 
well  as  to  scholati.  This  is  the  iiiitinl  voltunc  of  i  icrics  to  be  cnlillcd, 
"  Liirary  of  Eionomia  and Patilics,"  undrr  the  editorial  control  ot  Priil. 
Richard  T.  Ely,  Ph.D.,  IX-D.,  Professor  of  I'oljtknl  Economy  nnil  Direc- 
lor  of  ihe  School  at  Economies,  Political  Science,  and  History  nt  ihu 
University  of  Wisconaia.  It  is  designed  lo  include  in  ihe  series  only  tlich 
*olum«s  OS  deal  with  timely  topics  in  a  fresh,  interesting,  and  instructive 
maiinei;  and  the  standard  of  excellence  mniniained  will,  it  is  hoped,  give 
lo  this  series  a  leading  lank  in  Ibis  country  nnd  nlnnad. 

"  Hi*  (reimnt  of  the  inRuenco  of  the  independent  imsury  upon  the  Giund«  tS  Ihe 
CBiuiliTi>iUJniliIcd  by  ihe  but  aulhnrltle*  in  Ihc  country  la  be  enunenlly  found."— H'u. 
arnub,  SlaliJ,mr-ml. 

"  A  thnughiliil  Imdae,  uul  of  UDquuIfcKubte  value,"  ~  PuNic  Ofnin 

•■A»olldKhoUrly7<ork.«»»o?pi      '  "       "     ■        '"     " 


3I0K,  Impanial,  an 


pEPUDIATION   OF   STATE    DEBTS    IN 
THE  UNITED  STATES. 

By  William  A.  Scott,  rh.D.,  Assistant  ProffMor  of  Political  Econ- 
omy in  the  University  of  Wisconsin.  (Volume  If.  in  the  Library  of 
Economics  and  Politics.)  Ixnio,  clolh.  vii.-t'jss  pp.  Appendices,  in- 
dex.   $i.so. 

"  Will  prove  IB  InHnimcnl  ol  educsdon  in  Ihe  •odil  and  etonomk  neouitiu  nl  oui 
peoble."  —  /'kiltdt/^ia  LtJgfr. 
"Jir.  Scnrr^B  1»o1t  mlinuld  £nd  in  w^y  [a  tlu:  library  of  eveiy  Ihoughifu!  Initiacu  man 


ry  public  libniT  aod  e« 


in  of  Irfwkft  of  refen 


wbictiltl*  culremely  difficult  In  obtain  ilKWhere."  —  Auron/ovrM/. 
"  '^      if  lt»  nutl  ivporUDt  conlribuliobi  of  The  day  \a  tiouicial  li 


-  Tlu  JmiiftiulaHl. 


Hmtid 
cvTfullyaadwlihdbcneliinpartialil>." 


THOMAS    Y.    CROWELL 
NEW  YORK !  46  East  14th  St. 


&    CO.,     PUBLISHERS. 
BOSTON:  100  Purchase  St. 


'^ 


U>  be  leul  by  aM  who  teek  to  be  wi 


JHE  ENGLISHMAN  AT  HOME: 

His  Responsibilities  and  Privilegt 

By  EdwaRIi  PORHirr,  (ormcrly  London  Editor  nl  ibo  M; 

The  aulhor'a  aitn  has  been  lo  makt  the  book  nol  only  of  use  »ni1  inlirrcst 
to  students  ol  civics  anil  ol  Englisb  liistory  and  cnnlcmponity  polilks,  but 
also  ol  value  to  Ameiicnn  visiiurs  lo  Englnnd.  and  to  iculcr^  of  Enyli!.h 
news  in  the  American  press.  His  ^iccuracy  nnd  carefuloess  ol  slilL-nient 
may  be  sub)ecled  tu  the  most  cislical  lest.  The  style  is  good  and  enlcr- 
taining.  lie  book  cannot  Iftil  to  be  ft  wclconx:  addition  i«  every  libiaty. 
One  vol.     Golh,  I2nia,  xiv.+379  pp.      Appendices,  indei.      Sl'7J. 

"So  adef|iute  twok  hu  been  rflsily  procurable  which  briefly  and  nini>]v  hu  mid  tio« 
the  EitfUihniin  iBgoremed.  aad  wlut  are  hii  mpoailhiUtiei  uid  piivikna-  Mr.  Porrilt 
lUB  cHHVored  to  supply  Ihd  Bort  of  bnok^  and  nw  MKCcrdcd  admiRbly-  He  ham  told 
about  evntlhmf  an  AtDericu  necdi  id  know,  aad  huioldit  accortUogioaraellitJd  wlUi.h 
leavoi  hanDv  anything  lo  be 

"A  valuable  book,  andniH 
—  C»kjgB  Timn. 

"  A  hlKhly  WEloHDe  rolaate." —PAzladrt/iii  Prtu. 

"Of  rare fnietlal and  great  value."  —  fturm  Adrttiiier.  j 

"A  iKtter  acc«oat  ol  the  wtirklnE  iasdtuliooi  of  KueUnd  (hao  iiclHrwIiercacceiH 
10  AmericiD  leaden."  —  Balfm  Htntld.  \ 

"  A  very  lueful  and  Initrucllve  book."  —  Tht  Btain.  ' 

PHILANTHROPY  !!!i  SOCIAL  PROGRESS. 

Seven  Essays  delivered  liefoic  the  School  of  Applied  Elbirsnl  Plymoul! 
Mass.,  by  Mis*  Jane  Addams,  Father  J.  O.  S.  Hunlineton.  Kolsil  / 
Woods,  Prof.  Frnnkliu  A.  (liildinBS,  and  Bernard  Basanquel,  wilb  0 
inlroduclion  by  Prof,  II.  C  Adnmsuf  Michigan  University.  Clotli,  tami 
xi.+26Spp.     $1.50. 

"  STcdaHiatHin  In  modeni  life  llu  it»naiiT)  llie  depeodencies  of  men  and  tlaam  1 
nch  a  dcfree  that  iDterdepeadcnce  U  a  lliinf  which  \^/tie,  ralber  than  an  idea  10  I 
rfojinuJ ahiml.  Sodely  [B  coming  ui  be,  L.-ifaeI,ar^nlc;  and  the  elaiinol  a  {wHt^ii  <iry4: 
lam,  that  all  porta  ffiould  Kod  harmony  of  Uk  tune  reco^ltlai^  of  aeomninn  a.\m,  flti>u 
Itself  l<i  tbeallkude  whiihUtge  nunbera  of  piivini  an  aHumlnK  fielon  llw  -.:iril  |.i.,l 

lem  of  the  diy.    AnJ  I  doubt  not  thai  maoi'  whufind  i"-"  "■-■- ''■  -  ■    "  -■    -    ■- 

cauae  It  eaimaaa  1 1  vljomus  and  deoded  language  a  I 
teut  dimly  coudoua.    //  h  a^wilift  la  mtrtOiia  n 


in  the 


thi  iki-ig." 
lbdViu(S1y 


'iol'phUi 
■  and  coQ^Vtion-' 
readara  of  these  lectui 


u4lable  work  or  leading  ^d  in 


led,  aiarlled.  (^qued,  ai 
of  l«t-b«ik  in  pNlanlhrnpy.  and  no  <• 


Kl  discoaaed  with  genuli 


It  valuable  volunxea  from  lb 


:  (ludcnl  of  asdal 


Fur  nit  I7  atl  itakttBtrt,  rr  icHl  fMlfaidh  '*'  ^iJii*en  at  naipt  Strict. 

THOMAS    Y.    CROWELL    h.    CO.,     PUBLISHERS, 
NEW  YORK ;  46  Eut  14th  St.       BOSTON :  100  Purchaca  St. 


.A'A."    ^^ 

InfctJ^" 

-JUiif 
-The 

If